| dc.description.abstract | The ability to access affordable credit is a critical element of private sector led growth,
particularly for small businesses that often lack the initial capital needed to grow and expand
and also for agricultural households, where expenditures on inputs precede the returns from
harvest; it also increases a business or household’s ability to bear and cope with risk. This
study sought to establish the relationship of access to credit on financial growth of SME’s in
Nairobi County.
To achieve the objective of this study; a descriptive survey design was used. The population
of this study was SME’s registered in Nairobi County. The researcher did a cluster sampling
of 40 small and medium enterprises in Nairobi based on geographical locations. Four main
streets namely: Moi Avenue, Kenyatta Avenue, River Road and Tom Mboya Street were
selected. The study used secondary sources of data. Secondary data was sourced from the
financial records of the SME’s from year 2009 to 2013. Other sources of secondary data
included relevant literature and records from the library. Access to credit was measured
through checking the loan book records from SME’s, asset turnover was measured using
sales revenue divided total assets while the size of the firm was measured using the return on
sales which is net income divided by sales. The dependent variable was financial growth
which was measured using increase in net assets. Data collected was purely quantitative and
it was analyzed using descriptive analysis. Regression analysis was used to come up with the
model. The study used a multiple regression equation. Provision of credit to SMEs is still a
fundamental problem faced by most owners and managers of SME’s since most of them lack
security or collateral to be able to access credit facilities.
The findings of the study revealed that a few owners of SME’s that obtained credit were able
to grow and expand their businesses significantly.
variables. The study also revealed that 97.3% of financial growth in the SMEs could be
explained by the variables under study. From this study it is evident that at 95% confidence
level, the variables produce statistically significant values and can be relied on to explain
growth in the SMEs sector in Kenya. The government should formulate policies that ensure
commercial banks and other financial institutions provide adequate information on the
requirements and procedures for applying for a loan. This will enhance efficiency and
effectiveness of financial institutions since the borrowers are aware of what is expected. This
will enable the owners of SME’s to easily access credit since they are informed of what is
expected. The government should try hard to meet the credit needs of the SMEs in the
country for a speedy economic growth through creating an enabling environment for financial
institutions to thrive. This study focused on SMEs in Nairobi County and therefore the
findings of this study cannot be generalized to SME’s outside Nairobi County. The study
recommends that further research could be conducted on SME’s countrywide to investigate
on the effects of access to credit on financial growth of SMEs to find out whether there are
commonalities or unique factors. The study recommends that future research should lay more
focus on SME’s in the rural setting in order to find out whether similar relationship exists
between access to credit and financial growth in SME’s. This would provide more evidence
on the level of access to credit for SME’s in the rural setting and in urban areas then the
causes and effects can be documented. | en_US |
