Effects of Financial Deepening on the Entrepreneurial Growth in Kenya: a Case Study of Smes Within Nairobi County

Abstract

This research project’s aim was to define the effects of financial deepening on entrepreneurial growth in Kenya. The financial deepening indicators comprised of credit received by entrepreneurs/SMEs, the affordable nature of interest rates, savings culture coupled with the financial sector regulation. This research study employed a descriptive survey design and data was retrieved from both primary and secondary sources. Primary data was retrieved with the aid of a questionnaire while secondary data was retrieved from expressive documentary analysis. The collected data was afterwards coded before the actual analysis with the useful aid of the Statistical Package for Social Sciences (SPSS). The results of the study were then presented in tabular form by particular use of line graphs and bar graphs. Major study findings indicated that the growth rate of the loans accessed by entrepreneurs/SMEs was on an unchanging progress in the period between 2006 and 2016. The four notable determinants (credit access, interest rates affordability, savings culture together withfinancial sector regulation) also had a confirmatory correlation with the expanded (growth) rate of entrepreneurs/SMEs. The researcher recommends effective enhancement of the distribution and apportionment policies to keep guard against bad debts and untoward wastage of funds. There is also the necessity to initiate a proper and workable policy to make certain that the loans advanced to clients are equitably dispersed across the SMEs country wide to make sure that the rewards of economic and financial development are secured by a much wider population among other notable recommendations. The study further recommends the realignment of the interest rates in tandem with the existing parliamentary laws to prevent the exploitation of entrepreneurs/SMEs by the financial lending institutions. The researcher suggests that a study be carried out to which will give a model to guide the establishment of the appropriate lending rate that can ensure a steady positive entrepreneurial growth in the country.