| dc.description.abstract | Micro, Small and Medium size enterprises are constrained by a number of factors which
include among others difficulty in accessing credit facilities. In a bid to improve MSMEs
access to credit there has been a significant growth of MFIs. The researcher was carried
out with the objective of finding out the relationship between access to microfinance
services and financial performance of the micro, small and medium size enterprises in the
busy town of Embu in Eastern province of Kenya. To achieve the stated objective a
quantitative historical research design was used, primary data was collected using a data
collection sheet on the financial performance of the MSMEs in Embu town. Out of the 50
MSMEs identified for our sample, 31 responded, representing 62% response rate. The
research also used any available information from the secondary sources which was the
financial statements of the organisations visited. The research quantified access to
microfinance services in terms of the loans disbursed to the MSMEs while financial
performance concentrated on organisation profitability measured in terms of Return on
Assets(ROA). Descriptive analysis as well as regression analysis to analyse the data
collected and found that there was only a very small positive relationship between the
amount of loans disbursed and ROA while there was a stronger relationship to other
control variables such as turnover and age of the business. There was a negligible
negative relationship between the ROA and size of the business. Although the MFIs do
have an impact on the financial performance of MSMEs, it is very small and may not
form a strong case for their increased presence especially in rural town such as Embu
town. Perhaps it is not enough to just disburse funds and the MFIs may need to equip the
recipients more with business skills in order to run successful enterprises. | en |
