Influence of financial technology on the performance of micro and small enterprises: a case of Wakulima market Nairobi, Kenya

Abstract

Financial Technology is the innovative power of technology to carry out financial services. Commercial banks, microfinance institutions, non-banking financial institutions, investors and other companies are nowadays competing in developing applications that harness the benefits that come with the contemporary technology. Financial technology helps organizations with a strategic plan to overcome the challenges they come across in achievement of a sustainable competitive advantage. In seeking to establish the influence of financial technology on performance of MSEs at Wakulima market, the study assessed the influence of telebanking, market-place lending, e-commerce financing, and invoice financing on performance of MSEs at Wakulima Market. Descriptive research design was employed on a target population of 650 MSEs at Wakulima Market whereby the study used simple random sampling to obtain 248 entities that were subjected to questionnaire. Data was collected through semi structured questionnaires. Reliability and validity of the questionnaires was tested through a pilot study that was conducted before the actual data collection exercise commenced. Data was obtained and analyzed using SPSS software version 21. From the findings obtained it’s clear that 66% of the respondents were male while 34% of the respondents were female. This implied that Wakulima market is dominated by males who carry out business there. Majority of the respondents 69.5% were aged 20-35, 17.5% of the respondents were aged between while 13% of the respondents aged between18-20. The clearly indicated that majority of working population n Wakulima Market are youths. Majority of the respondent 48.5% were entrepreneurs, 36% were partners while 15.5% were employees. This indicated that the study targets the right population for the study. Majority of the respondents 79.5% had secondary education, 14.5% had college/technical education, while those respondents who had university education and primary education were 3%respectively. From the findings it’s clear that majority of the respondents were literate and well applied their skill to learn their businesses. Majority of the respondents 75% had over 15 employees, 15%had between 6-10 employees, and 5.5% had 11-15 employees while 4.5% had 2-5 employees. This clearly indicated that the enterprises fell under MSEs category which was the focus of the study. Based on the model employed it confirmed that the independent variables in the study were positively related to the performance of MSES and were statistically significant at 5% significance level. Moreover, all the p-values had values less than 0.05, thus all the null hypotheses in the study were rejected and the alternative hypotheses accepted to be true. Further, it was established that holding Telebanking, Market place lending, Merchant & e-commerce financing, Invoice financing and Regulatory framework to constant, Performance of MSEs would be at 4.012. An increase in unit in Telebanking would result to an increase in performance of MSEs by 0.338, an increase in unit in Market place lending would lead to increase in Performance of MSEs by 0.597, unit increase in Merchant & e-commerce would result to an increase in performance of MSEs by 0.292, an increase in unit in invoice financing would result to an increase in performance of MSEs by 0.545. Lastly, an increase in unit in regulatory framework would result to an increase in performance of MSEs by 0.645. This confirms that there was a positive relationship between financial technology and performance of the MSEs. The study recommends that more studies should be conducted on financial technology and how they influence performance of MSEs in the economy. There much dynamism in the market which is changing every now and then thus creating more threats and opportunities. This study focused on MSEs at Wakulima market only, this may not fully represent all the MSEs in Kenya. Further studies can be carried out in other regions of the country in order to obtain conclusive results.