Effects of access to credit on profitability of small and medium enterprises in Roysambu sub-location, Nairobi county
This study was designed to investigate the Effects of Access to Credit on Profitability of Small and Medium Enterprises in Nairobi County. The availability of external finance for small and medium enterprises (SMEs) is a topic of significant research interest to academics and an important issue to policy makers around the globe. Majority of entrepreneurs in the SME sector are still considered not credit worthy by most commercial banks because of their inability to fulfill certain banking terms and conditions. The study aimed to find out how issues like firm size, credit risk, liquidity, deposits and interest rates influence access to credit of small and medium enterprises. It also examined difficulties SMEs face in accessing loans, difficulties financial institutions face in lending to SMEs and the impact of loans on the profitability of SMEs. This study adopted a descriptive survey design as a major method of research where questionnaires will be used to collect data from a sample of small and medium enterprises under the study. The reliability and validity of the instrument of data collection were tested through a test re-test approach. Content validity, construct validity as well as criterion validity were applied to ensure that the instruments represented what they were designed to measure. Secondary data from the annual published reports of SMEs in Kenya for a period of 6 years from 2010-2015 were used to collect data. The target population was 106 selected small and medium enterprises from Roysambu Sub-Location, Nairobi County. A sample of 86 was then selected through systematic random sampling. Data was collected through administering of questionnaires and analyzed by the use of descriptive statistics constituting of correlation and regression. The study findings were then presented and discussed.
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