MODERATING ROLE OF GOVERNMENT POLICIES IN THE RELATIONSHIP BETWEEN MICRO FINANCE SERVICES AND FINANCIAL PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN KISII TOWN, KISII COUNTY, KENYA
Abstract
The purpose of the study was to investigate the role of government policies on the relationship between microfinance services and the financial performance of small and medium enterprisesin Kisii Town. The specific objectives of the study were to: establish the influence of entrepreneurial training on financial performance and to determine the influence of saving mobilization on financial performance. The study targeted 575 registered small and medium enterprises in Kisii Town. The sample of 236 respondents was used by stratified sampling technique. The study sought to determine the effect of entrepreneurial training as moderated by the role of government policy on financial performance. The regression analysis showed that there was a negative association between entrepreneurship training and financial performance. From correlation analysis, there was an insignificant positive relationship between saving mobilization and financial performance. The study implied that there was a significant effect relationship between government policies and financial performance. The study recommended that small and medium enterprises should attend entrepreneurship training for them to improve financial performance.
Key Words: entrepreneurial training, saving mobilization, Government Policies, Microfinance Services, Financial Performance
CITATION: Moseti, B. M., Chesoli, J. W., & Muya, J. (2020). Moderating role of government policies in the relationship between micro finance services and financial performance of small and medium enterprises in Kisii Town, Kisii County, Kenya. The Strategic Journal of Business & Change Management, 7(3), 1264 – 1277.
Full Text:
PDFReferences
Adolfson M., (2017) Optimalmonetary policy delegation under incomplete exchange rate pass-through small and medium enterprises, SSE/EFI Working Paper Series in Economics and Finance: 477.
Agenor, P., Joshua A., Alexander, W. and Hoffmaister, T. (2014) The Credit Crunch in East Asia: What Can Bank Excess Liquid Assets Tell, Journal of International Money and Finance: 23, 27–49
Ahiawodzi, K. (2012). Access to Credit and Growth of Small and Medium Scale Enterprises in the Ho Municipality of Ghana, Department of Banking and Finance, Published Thesis, University of Professional Studies, Accra, Ghana.
Ahmed, M. Adams, M. Chowdhury, M., and Bhuiya, A. (2011).Gender, Socioeconomic Development and Health-Seeking Behavior in Bangladesh. Journal of social Science and Medicine, 51 (3): 361-371.
Akerlof, G. (1970). The market for lemons: quality uncertainty and the market mechanism, Quarterly Journal of Economics and finance: 48:488-500.
Akinyemi O., (2018). National MSE baseline survey 2015. Kisii: Central Bureau of Statistics, International Centre for Economic Growth and Kenya rural Enterprise Programme held in Kisii County
Anand, S. &Kanbur, S. (1993). The Kuznets Process and the Inequality-Development Relationship, Journal of Development Economics, 40: 25–72.
Appiah S. K., (2006). Quantitative Methods for the Social Scientist (3rd Edition). UniversityPress.KNUST. Kumasi
Aryeetey, E., BaahNuakoh, & Duggleby, H., (2014) Supply and demand for finance of small scale enterprises in Ghana, Discussion paper No.251, World Bank, Washington, DC
Akerlof, K., (2011). Credit Guarantee Schemes for SMES, World Bank Washington DC
Barbara R., (2013) Theeffect of microfinance services on financial performance. MBA research project in Spain University
Bernanke, S. & Blinder, S. (1992). The federal funds rate and the channels of monetary transmission, The American Economic Review: 82:90-92.
Barwise, G., (2014) Returns on Capital in Microenterprises: Evidence from a Field Experiment.The Quarterly Journal of Economics 2(1) 211-222
Brealey R. A., Myers SC, and Allen F (2018). Principles of corporate finance – 9th Edition McGraw-Hill/Irwin, New York.
Carton, R. (2014). Measuring Organizational Performance: An exploratory study. Athens,Georgia: University of Georgia.
ChijahK. and ForchuT., (2017) The Credit Crunch in East Asia” What Can Bank Excess Liquid Assets Tell U., Journal of International Money andFinance: 23, 27–49
Claus, I. & Smith, C. (2015) Financial intermediation and the monetary transmission mechanism, Reserve Bank of New Zealand Bulletin, 62, 4-6
Copestake, J. Bhalotra, S., and Johnson, S. (2017). Assessing the impact of Micro- financial services: A Zambian case study. Journal of Development Studies, 37 (4): 81-100
Diagne, A. &, M. (2017). Access to Credit and its impact on Welfare in Malawi. IFPRI Research Report, 116
Dondo, A.C. (2015). The status of microfinance in Kenya. Paper presented at the annual conference on New development finance. Goethe University of Frankfurt.
Emad H., (2013) The Relationship Between Government Policy And Financial Performance: A Study On The SMEs In Iraq, China-USA Business Review, ISSN 1537-1514, Vol. 13, No. 4, 290-295
Eniola A., A., (2015) Government Policy and Performance of Small and Medium Business Management Department of Business Management, University of Malaysia email: Antony@yahoo.co.uk, International Journal of Academic Research in Business and Social Sciences 5,(2) 22-39
Eppy, K., &Julius M., (2016), Basic Financial Management, Makerere University Business school publication.
Frempong, G. (2017). Towards an African e-Index: Small and Medium Business Survey Wireless Opportunities and Solutions: A regulatory perspective LIRNEExpert Meeting and International Workshop, 7-9.
Galor,O. &Zeira, J. (2012).Inequality, Human Capital Formation, The Review of Economic Studies, 60(1), 35-52.
Galindo, H. (2013), Bank Risk Management Theory. Conference on Risk Management and Deregulation in Banking. Inter-American
Gakure R., (2016), Factors Influencing Micro-financial Repayment 5thed. Jisti Publishers, Nairobi Kenya
Israel, G.D., (2012) Determining sample size, Program evaluation and organizational Development, Institute of food and Agricultural Sciences [IFAS], University of Florida,Gainesville, FL 32611, 16-32
Jensen and Meckling (1976) agency relationship in small and medium enterprises, Third conference paper 1976 NewDelhi publishers,
Kashyap,M., (2013).Microfinance in Africa: Is it either a Problem or the Solution. World Development, Vol. 25No 7, pp 1081-1093.
Khan, T., (2018)The Holy Grail of Microfinance: Helping the poor and sustainable Microfinance evolution, achievements and challenges, London: ITDG finance. Germany: InterdisziplinareProjekt ConsultGmbH.
Kihara D. W., (2016) the effect of microfinance services on the financial performance of small and medium enterprises in Nairobi, Kenya, Research project submitted in partial fulfillment of MBA, University of Nairobi.
Kundid R., (2017) Rural Finance Markets-An Important Tool to Fight Poverty. Quarterly Journal of International Agriculture Vol.34 No.2, pp 105-108.
Koech S., (2011) Effect of provision of Microfinance on the performance of microenterprises: Astudy of youth micro-enterprises under the Kenya RuralEnterprise Program (K-REP), Kisii County. African Journal of Business Management, 5(20), 8290-8300.
Kothari C.R and GauravG., (2006) Research Methodology, 3rdEdtn.New Age International Publishers, New Delhi.
Karlan,D.,& Jonathan Z. (2018).ExpandingMicroenterprise Credit Access: World Bank economic development Institute. Washington DC.
Kamau A. M., (2012) effect of microfinance lending on the financial performance of
businesses; A case of small and medium enterprises in Nakuru east sub-county, International journal of science and research 3(2) 64-70
Kihara W. D., (2017) The Effect of Microfinance Services On Financial Performance Of Small And Medium Enterprises In Nairobi County, A Research Project Submitted In Partial Fulfilment Of The Requirement For The Award of the Degree of Master of Science In Finance, School of Business, University Of Nairobi
Kiprono S.W., (2017) The Effect Of Microfinance Services on The Growth of Small And Medium Enterprises In Kericho count, A Research Project Report presented In Partial Fulfillment Of The Requirements For The Award Of Master Of Business Administration Of The University Of Nairobi November 2017
Kothari, R. (2014). Research Methodology: Methodsand Techniques, New Delhi: New Age International Publishers.
Mead, D. C. & Liedholm, C. E., (2013) Small enterprises and economicdevelopment: the dynamics of micro and small enterprises. Routledge Pres.
Maria, Florica, and Catalina (2012). The microfinance revolution: Sustainable finance for the poor vol 1. Washington,D.C.: World Bank
Matemilola, B.T; & BanyAriffin, A.N (2011). Pecking order theory of capital structure; empirical evidence from dynamic panel data. International Journal on Business Review.1(1) 185–18
Murray Frank Z.; Goyal S.,& Vidhan K., (2018). "Testing the Pecking Order Theory of Capital Structure,". Strategic and financial management 2(4) 31 -38. SSRN 24313
Myers, Stewart C.; Majluf S., &Nicholas S. (1984). "Corporate financing and investment decisions when firms have information that investors do not have." Journal of Financial Economics.13 (2): 187–221
Mugenda, O.M., & Mugenda, A.G. (2003). Research Methods: Quantitative & Qualitative Approaches. Acts Press Publication
Mugori MadagaW. (2012) the effects of access to microfinance on the performance of small and medium enterprises owned by youths in Nairobi Kenya, A research project submitted in the school of business, University of Nairobi
McDanile, C., & Gates, R. (2011), Marketing Research Essentials. United States: South-Western College Publishing’.
Millichamp, R. (2018). Expanding Microenterprise Credit Access: World Bank Economic Development Institute. Washington DC.
Makosa, O. (2017). Effect of microfinance services on the financial Empowerment of youth in Migori County, Kenya. Journal of business and management Review vol. 2(3), ISSN: 2047-0398, 22 -35
Mohamud A. M., (2016) effects of Microfinance Services on the Financial Performance of Small and Medium Enterprises, Published MBA Research Project, UON
Mmbone M. J., (2015) The Relationship Between Voluntary Disclosure and financial Performance of Selected Companies Quoted at the Nairobi Securities Exchange, Journal of accounting and public policy, 14, 311 – 368.
Marguerite, (2011) A study on Savings Mobilization in Micro-Enterprise Finance in West Hartford Conn Kumarian, A Review and Synthesis of the Economic Value-Added Literature.School of Economics and Finance.
Myers, A., (2013) Beyond Long term development and the millennium development goals Netherlands environmentalassessment agency, Accounting Business Research. 25(97): 41-53.
Muktar O., (2014) A study on the regulating microfinance institutions in India. Journal of accounting and public policy, 14, 311 – 368.
Ndungu K., (2013)Microfinance, Entrepreneurship, and Rural Development: Empirical evidence from Makueni District, Kenya
Ogujiuba, G., (2013) saving Mobilization on employment savings of business firms, Internal Journal accounting and marketing 4(20) 241-247.
Omondi R. I.A, (2018) Microfinance Services And Financial Performance Of Small And Medium Enterprises Ofyouth SMES In Kisumu County, KENYA International Academic Journal of Economics and Finance | Volume 3, Issue 1, pp. 24-43 IAJEF) | ISSN 2518-2366
Richard T, Memba F, and ZénonM., (2015) The effects of deposits mobilization on financial performance in commercial banks in Rwanda. A case of equity bank Rwanda limited; International Journal of Small and Medium Entrepreneurship ResearchVol.3, No.6, pp.44-71, November2015 Published by European Centre for Research Training and Development UK (www.eajournals.org)
Stewart Maria., (2018)Governance and the Efficiency of Economic Systems (GESY): Group Lending VersusIndividual Lending in Microfinance. Baltimore. The John Hopkins University Press.
Turyahebwa, D., (2013) Microcredit and poorest of the Poor: Theory and Evidence from Bolivia. World Development, Vol 28 No.2, pp 333-346
VigeninaS., and KritikosH., (2014) The Miracle of Microfinance and financial performance? Evidence from Randomized Evaluation.Department of Economics, Massachusetts Institute of Technology (MIT) Working Paper, May 2014
Walsh P., (1998) Finance against Poverty 23rd edition, Routledge Press, London.
Wahid,P., (2014). The Success of microfinance: what really sustains this poverty relief effort, free-market forum discussion, School of Business, Nazarene University
Zeidan, Rodrigo M.; Galil, Koresh; Shapir, Offer M., (2018). "Do Ultimate Owners Follow the Pecking order Theory?" international Journal of economics and management 3(3) 67-78
DOI: http://dx.doi.org/10.61426/sjbcm.v7i3.1741
Refbacks
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution 3.0 License.
PAST ISSUES:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.