| dc.description.abstract | This study establishes how MFIs ration credit among MSEs.
The hypothesis of the study was that credit rationing
influences the operations of MSEs. Savings, business
profitability, group membership, location of the business,
ability to pay and the frequency of the borrowing were
established as some of the criteria used by MFIs to ration
credit.
Operations of MSEs were identified to include location,
design and layout of the equipment, distribution chain,
stocking and production capacity. These operations
constitute capital and working capital expenditure.
The MSEs mainly required credit to increase their stock
levels and repair or add their capital equipment. The
level of credit in terms of adequacy was related to the
level of the operations in terms of expansion using Chisquare.
The analysis of the data collected revealed that higher
levels of credit received enabled MSEs to meet more of
their planned operations. MSEs that received high levels
of credit were those with profitable businesses, high
savings, had ability to pay, had group guarantee and had
received more than one loan from the MFls.
The study concluded that a relationship exist between
credit rationing by MFls and the operations of MSEs.
Thus, MFls should design credit rationing programs that
enhance the overall business operations of MSEs from the
location of the business to the point at which the product
gets to the consumer. | en |
