Entrepreneur financial literacy, financial access, transaction costs and performance of micro enterprises in Nairobi City County, Kenya
Abstract
Entrepreneur financial literacy has been identified as one of the major competencies
required for the establishment and management of microenterprises. However, empirical
studies on the relationship between financial literacy and microenterprise performance
have produced contradictory and inconsistent results and conclusions, hence the need for
further research in this area. This study sought to establish the relationship between
entrepreneur financial literacy, financial access, transaction costs and performance of
microenterprises in Nairobi County, Kenya. The study was guided by five objectives
namely; to establish the relationship between entrepreneur financial literacy and
performance of microenterprises; to determine the relationship between entrepreneur
financial literacy and financial access; to establish the influence of financial access on the
relationship between financial literacy and performance of microenterprises; to assess the
influence of transaction costs on the relationship between financial literacy and the
performance of microenterprises and to determine the joint influence of entrepreneur
financial literacy, financial access and transaction costs on the performance of
microenterprises. To achieve these objectives, five research hypotheses were formulated.
A cross-section design was adopted for the study. The study population comprised of all
microenterprises in Nairobi County, from which a representative sample of 396
microenterprises was drawn. The main study instrument was a questionnaire which
comprised of likert-type scale questions on the main variables of the study. The data was
analyzed using both descriptive and inferential statistics. Hypothesis testing was done by
use of regression and correlation analysis. The findings of the study indicated that
entrepreneur financial literacy had a statistically significant influence on enterprise
performance therefore the hypothesis that financial literacy influences enterprise
performance was supported. The study also established that financial literacy had a
statistically significant influence on financial access therefore the hypothesis that
financial literacy influences financial access was supported. The study also revealed that
intervening influence of financial access on the relationship between entrepreneur
financial literacy and performance microenterprises was statistically significant. Further,
the results revealed that transaction costs had a statistically significant moderating
influence on the relationship between entrepreneur financial literacy and performance of
microenterprises. Finally, the study established that the joint influence of entrepreneur
financial literacy, financial access, and transaction cost is statistically significant. This
implies that the study variables jointly predict enterprise performance. The study
recognizes that the variables used for this study are not exhaustive and therefore suggests
that future research should include more triangulation utilizing other intervening and
moderating variables as well as using alternative measures of all the study variables.
Future research should also conduct longitudinal studies that would provide definite
information about cause-and-effect relationships as well as the changes in study variables
over time.
Publisher
University of Nairobi
Subject
Micro enterprisesDescription
Thesis Doctor of Philosophy (PhD) Business Administration