MICRO-CREDIT PRACTICES AND FINANCIAL PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN KISII COUNTY, KENYA
Abstract
Micro Finance Institutions offer non-financial packages, such as training, in addition to their principal loan offering to Small and Medium Enterprises in order to maximize the usage of the lenders' resources. Small and Medium-Sized Enterprises must be profitable in order to alleviate poverty and promote economic progress. This study was anchored on three theories, namely; Agency Theory, Finance Growth Theory and Financial Intermediation Theory. The objective of the study was to establish the effect of Micro-Credit practices on Financial Performance of Small and Medium Sized enterprises in Kisii County, Kenya. The study adopted a descriptive research design. The target population for the study was from the licensed Small, Medium sized enterprises within the municipality in various sectors that include: trade, commercial services, and financial services. The study adopted stratified method of sampling technique and applied Slovin’s formula to get a sample size. The study used the questionnaire as a tool of primary data collection. The pilot study was taken from Small and Medium Sized firms in Kisii County, Kenya that were not part of the main study. Statistical Package for Social Science (SPSS version, 2024) Software was used to tabulate, analyze, and refine the data for both descriptive and inferential statistics. The results indicated Micro-Credit practices had an effect on financial performance of Small and Medium Size enterprises. The study recommends for the Small and Medium Sized enterprises to embrace micro-credit practices in management since there is an influence and improvement of financial performance. Furthermore, the study recommends for further studies based on similar variables though on various different category enterprises and even larger area coverage than at county level.
Key words: Micro-Finance Institutions, Micro-Credit practices, Financial Performance
CITATION: Okari, P. O., & Kadima, M. J. (2025). Micro-credit practices and financial performance of small and medium enterprises in Kisii County, Kenya. The Strategic Journal of Business & Change Management, 12 (2), 943 – 957. http://dx.doi.org/10.61426/sjbcm.v12i2.3250
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DOI: http://dx.doi.org/10.61426/sjbcm.v12i2.3250
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