INFLUENCE OF CREDIT RISK MANAGEMENT PRACTICES ON FINANCIAL PERFORMANCE: A CASE OF SMALL AND MEDIUM ENTERPRISES IN KISII TOWN, KENYA
Abstract
The objective of the study was to examine the effects of credit risks management practice on financial performance. Specific objectives included; to investigate the effects of product diversifications on financial performance of small and enterprise in Kisii town, and to determine the effect of market risk on financial performance of small and medium enterprises in Kisii town. The study used cross-sectional design. The cross-section design is the method of collecting information from different samples from large population. Self-administered research questionnaire was ensured by the researcher. The target population consisted of 857 respondents. Stratified sampling was used. The sample of 86 respondents was used by applying 10% of the target population. Stratified sampling technique was used to categorize SMEs in Kisii town under study to give a chance for every enterprise to participate. Managers, account clerk and owners provided information required by filling the questionnaire for primary data. The study analyzed the collected data by descriptive statistics such as percentage, mean and standard deviation. Inferential statistics such as correlation and regression analysis examined the association between variables. The study findings were presented by tables then discussions and conclusion was drawn. From the results, it was indicated that usage of product diversification led to appropriate management, product diversification considered quality of client looking for credit facilities while borrowed amount was convenient to the business and flexible products usage improved credit management. It was recommended that product diversification should be considered with quality of client is looking for credit facilities through variety of products.
Key Words: Product Diversifications, Market Risk, Small and Medium Enterprises
CITATION: Omweno, J. N., & Muturi, W. (2019). Influence of credit risk management practices on financial performance: A case of Small and Medium Enterprises in Kisii Town, Kenya. The Strategic Journal of Business & Change Management, 6 (4), 1099 – 1111
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DOI: http://dx.doi.org/10.61426/sjbcm.v6i4.1451
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