Short Term Impact of Interest Rate Capping on Availability of Funds to Small and Medium Size Manufacturing Enterprises in Nairobi

Abstract

The purpose or this study was to determine the short-term impact of interest rate capping on availability of funds in Nairobi County. This stud was guided by the research question; what is the impact of interest capping on availability of funds to small and medium size manufacturing enterprises in Nairobi, Kenya? A descriptive research design was adopted. The stud had a population of 1,072 Manufacturing SMEs in Nairobi County out of which a sample of 107 was selected. The data utilized secondary data; data was collected from the SMEs financial statements. The study data was analysed for descriptive statistics. The findings revealed that the interest rate capping had an impact on the availability of funds to manufacturing SMEs. The Study recommends that interest rate cap should be set and reviewed regularly to ensure it suits all the players in the market i.e. the demand side and supply side. Private and public sectors together with the government should put in place favourable regulatory framework to provide conducive business environment like reducing obstacles in accessing finance from commercial banks, dealing with inflation and interest rates.