The effect of table banking on investment decisions of small and medium enterprises in Nairobi county
The ability of firms to optimally exploit investment opportunities may crucially depend on the level of financial constraints that they face. Access to finance is commonly identified as the key factor holding small and medium enterprises (SMEs) back from growing at their full potential. Finance providers and the government fail to tackle this issue effectively. The specific characteristics of SMEs, namely their smaller size, greater likelihood of bankruptcy, greater operational flexibility making easier the substitution of assets, and the more opacity of information that aggravates the problems of asymmetric information, explain why the creditors consider too risky their investment in smaller firms. The study used primary data sources in gathering data for analysis. The primary data source was semi-structured questionnaires. A questionnaire is a research instrument consisting of a series of questions and other prompts for the purpose of gathering information from respondents. Questionnaires was considered given that they are cheap, respondents are given time to fill-in the questionnaires, do not require as much effort from the interviewer as verbal or telephone surveys, and often have standardized answers that make it simple to compile data. The study findings established that table banking also improves SMEs investment decisions as it reduces huge savings on cost of construction of bank premises and leasing costs than when SMEs are using the Agency premises. It also cuts on human resource expenses. The SMEs do not have to employ new staff to manage the agency and the cost of training if any is to the bare minimum. It further, saves on equipment like furniture and computers. Additionally, the convenience of access to banking services and the extended hours that the banking agencies work is attractive features to the customer. This also helps increase SMEs‟ revenue will minimizing costs. The study recommends that the government reduces the period of obtaining the legal documents in adopting table banking. The government should support the program more often and reduce the high compliance costs, bureaucracy in registration and high cost of taxation. Other areas that the study recommends include the government dealing with the cumbersome laws and regulations, corruption and illegal permits and licenses. The study recommends that regulations be efficient to enable more SMEs to embrace table banking service. The study further recommends that SMEs should fully embrace table banking through adoption of improved technology for information security to make it more reliable to the customers. This will increase volume of transactions which will lead to investment decisions. Based on the findings and conclusions presented above, the study recommends that SMEs should cushion their table banking from certain costs such as insurance costs, cash in-transit or premise setup costs. This will enhance performance of table banking. Besides, capacity of table banking in providing services can be enhanced by SMEs ensuring that table banking have enough float that can serve more client in order to mitigate clients disappointment and increase the number of customers. They can do this by advancing credit to their table banking. In addition, SMEs should educate and regulate their table banking to ensure uniformity in service delivery so as to enhance customer confidence in table banking. The study recommends that customers should be enlightened on the operation of table banking in order to enhance their confidentiality. Additionally, the study recommended that frequently trained on the operation process and policies to eradicate occurrence of error and mistake that are highly hindering penetration of table banking.