Determinants of Lending to Small and Medium Enterprises by Commercial Banks in Kenya
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Date
2016Author
Shikumo, David Haritone
Mirie, Mwangi
Type
ArticleLanguage
enMetadata
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Abstract: Small and Medium Enterprises (SMEs) access to external finance is an issue of significant research
interestto academicians. Commercial banks consider many SMEs not to be credit worthy because of their
inability to meet some banking requirements. Hence, the objective of this study was to investigate what
determines lending to SMEs by commercial banks in Kenya. To achieve the study objectives, a descriptive
research design was employed. The study undertook a census of the 43 commercial banks in Kenya, with full
data being obtained for 36 institutions. The study used secondary data from the annual published reports of
commercial banks in Kenya for a period of 5 years from 2010-2014. The data collected was analyzed through
the multiple linear regression using the Statistical Package for Social Studies version 20.The study established
that bank size and liquidity significantly influences (positively and negatively, respectively) lending to SMEs by
commercial banks in Kenya while credit risk and interest rates have no significant influence on lending to SMEs
by commercial banks in Kenya. The study recommends that lending to SMEs by commercial banks in Kenya be
enhanced by adopting policies that grow the commercial banks.
Keywords: Lending, Small and Medium Enterprises, Commercial Banks
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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