The Influence of Equity Bank Inclusive Financial Services on Performance of Small & Medium Enterprises in Nairobi, Kenya

Abstract

Small and Medium Enterprises (SMEs) have played a vital role in modern economies and have had a great influence in the development of those economies. SMEs majorly rely on banks and other financial institutions for funding. However, these businesses are still classified as risky since some of them rarely meet the conditions required by the financial institutions while some fail to present a security guarantee or any supportive information about their ability to meet their obligations. The huge contribution of SMEs business has necessitated financial institutions especially the banks to extend both credit and non-credit services. Commercial banks have recognized the unique challenges faced SMEs by offering relationship banking which focuses on meeting the customers’ needs that caters for both credit financial services and non-credit financial services. Among these include credit facilities, inculcating saving culture, business training and coaching and business clinics among other services. The study focused on the influence of Equity Bank inclusive Financial Services (Both credit and non-credit services) on profitability as a measure of performance of SMEs located Nairobi. The study used questionnaires as the primary data collection tool. Descriptive statistics and regression analysis was conducted to determine the relationship between the variables. The study has shown that these inclusive financial services offered by Equity bank influenced the performance of the SMEs positively. The study further recommends the action to be taken by policy makers to ensure there are Inclusive Financial Services and how banks can customize services to meet the needs of customers. The study also provides suggestions for further research.