Volume 12, Issue 1, November 2014, Pages 70–93
Lusuyi Nangaki1, Gregory Simiyu Namusonge2, and Robert Wamalwa Wandera3
1 Teacher, Kimilili Girls Secondary School, Kenya
2 Department of Entrepreneurship and Procurement, Jomo Kenyatta University of Agriculture and Technology, Kenya
3 Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya
Original language: English
Copyright © 2014 ISSR Journals. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
This study sought to investigate the factors that influence access to debt finance by Micro and Small Enterprises (MSEs) in Chwele Town, Bungoma County. The categories of firms under study were all registered MSEs in operation at the time. The study examined the following objectives: to determine the effect of Collateral security on access to debt finance, to establish effect of financial information on access to debt finance and to determine the effect of managerial competence on access to debt finance. The study employed a descriptive research design. The target population was 256 MSEs from which a sample size of 120 MSEs was selected using Nassiuma (2000) formula. Data was collected using self-administered questionnaires. The raw data was analyzed using descriptive statistics and regression. The first study objective sought to establish the relationship between the Collateral security and access to debt finance by MSEs in Chwele Township. It was established that most of the respondents had not pledged Collateral security for finance while. Most of the indicated that the nature of the Collateral security offered was private property which included their land. The study further established that respondents who could not provide Collateral security had their finance requests declined. From the regression analysis it was established that Collateral security and access to debt finance are positively related. The second objective aimed at establishing the relationship between financial information maintained by the firm and access to debt finance by MSEs in Chwele Township. It was established that most of the MSEs owners did not maintained their financial records and that the records maintained were mostly business plan, income statements and balance sheet. On access to debt finance, the study found out that most firms which kept financial information had their applications for debt finance approved while those that never maintained financial information had of the application declined. Thus the denial rate for debt finance was high for the firms that did not keep financial information. The analysis of regression revealed that financial information and access to debt finance had a positive relationship. Thus, a firm that maintains financial information was likely to obtain debt finance compared to one that does not. The last objective sought to establish the link between managerial competence of firm's owner and access to debt finance by MSEs in Chwele Township. In the study, it was found that most firm owners had an education level up to KCSE while a few had bachelor's degree. In terms of experience, most respondents had operated their firms for a period less than 4 years while a view had and experience above 20 years. The study established that; Collateral security, financial information and managerial competence influenced a firm's access to debt finance.
Author Keywords: Access to Debt Finance, Micro and Small Enterprises, Chwele Township, Bungoma County.
Lusuyi Nangaki1, Gregory Simiyu Namusonge2, and Robert Wamalwa Wandera3
1 Teacher, Kimilili Girls Secondary School, Kenya
2 Department of Entrepreneurship and Procurement, Jomo Kenyatta University of Agriculture and Technology, Kenya
3 Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya
Original language: English
Copyright © 2014 ISSR Journals. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abstract
This study sought to investigate the factors that influence access to debt finance by Micro and Small Enterprises (MSEs) in Chwele Town, Bungoma County. The categories of firms under study were all registered MSEs in operation at the time. The study examined the following objectives: to determine the effect of Collateral security on access to debt finance, to establish effect of financial information on access to debt finance and to determine the effect of managerial competence on access to debt finance. The study employed a descriptive research design. The target population was 256 MSEs from which a sample size of 120 MSEs was selected using Nassiuma (2000) formula. Data was collected using self-administered questionnaires. The raw data was analyzed using descriptive statistics and regression. The first study objective sought to establish the relationship between the Collateral security and access to debt finance by MSEs in Chwele Township. It was established that most of the respondents had not pledged Collateral security for finance while. Most of the indicated that the nature of the Collateral security offered was private property which included their land. The study further established that respondents who could not provide Collateral security had their finance requests declined. From the regression analysis it was established that Collateral security and access to debt finance are positively related. The second objective aimed at establishing the relationship between financial information maintained by the firm and access to debt finance by MSEs in Chwele Township. It was established that most of the MSEs owners did not maintained their financial records and that the records maintained were mostly business plan, income statements and balance sheet. On access to debt finance, the study found out that most firms which kept financial information had their applications for debt finance approved while those that never maintained financial information had of the application declined. Thus the denial rate for debt finance was high for the firms that did not keep financial information. The analysis of regression revealed that financial information and access to debt finance had a positive relationship. Thus, a firm that maintains financial information was likely to obtain debt finance compared to one that does not. The last objective sought to establish the link between managerial competence of firm's owner and access to debt finance by MSEs in Chwele Township. In the study, it was found that most firm owners had an education level up to KCSE while a few had bachelor's degree. In terms of experience, most respondents had operated their firms for a period less than 4 years while a view had and experience above 20 years. The study established that; Collateral security, financial information and managerial competence influenced a firm's access to debt finance.
Author Keywords: Access to Debt Finance, Micro and Small Enterprises, Chwele Township, Bungoma County.
How to Cite this Article
Lusuyi Nangaki, Gregory Simiyu Namusonge, and Robert Wamalwa Wandera, “Factors Influencing Access to Debt Finance by Micro and Small Enterprises: A Case of Chwele Township, Bungoma County,” International Journal of Innovation and Scientific Research, vol. 12, no. 1, pp. 70–93, November 2014.
