Effects of Access to Credit on Financial Performance of Small and Meduim Enterprises in Nairobi County.

Abstract

SMEs have been perceived as being extraordinary supporters of the Kenyan economy offering both stage and employment for inventive thoughts. They shape a bigger level of the organizations that work in Kenya when contrasted with their partner, the substantial organizations. However, their performance and growth is normally hindered with various challenges. One of the principle limitations that have been featured throughout the years is the financial constraints. Finance requirement is of central significance for the accomplishment of any firm, be it enormous or little. The reason for this study was to examine the effect of credit access on financial performance of SMEs in Nairobi County. Three main factors, namely firm size, loan amounts, access to credit and financial performance were explored in this research. Questionnaire and interviews were used to collect primary data while journals, books and internet were sources for secondary data. The data covered a period of five years ranging from the year 2012 to 2016. The regression model has an R of 0.724 which indicates a strong positive relationship between the variables. The coefficient of determination, R square indicates how well data fits in the statistical model; how successful the fit is in explaining the variation of the data. In this model, 52.4% of the variations in the dependent variable are explained by the independent variables his study serves as a reminder for them to offer financial services that are all inclusive and be more and more SMEs‟ sensitive. Through creating an enabling environment for SME the bridge that exists between large and small companies can be narrowed down. This can also be achieved through segmenting NSE for SMEs‟ listing and formulating regulatory framework that is SMEs friendly.