EFFECT OF BUDGETING PRACTICE ON SMES ACCESS TO FINANCIAL CREDIT IN KISUMU CITY CBD
Abstract
Credit availability is a significant component in the development of SMEs in Kenya. However, most SMEs in Kenya lack the expertise to manage their business activities due to a lack of trained staff and entrepreneurial knowledge. Therefore, the study sought to determine the effect of budgeting practice on SMEs access to financial credit in Kisumu city CBD. The study was anchored on the full disclosure theory. The study targeted 390 registered SMEs in Kisumu Town. The study adopted Nassiuma’s (2000) formula to get a sample size of 86. Additionally, the study used simple stratified random sampling and purposive sampling to determine the sample size from each SME. The study collected primary data using structured and unstructured questionnaire. The pilot test was conducted in Kisii town where 9 questionnaires were distributed to 9 finance officers. The content validity of the research instruments was determined by seeking expert’s opinions from research supervisors. Reliability was determined by assess the Cronbach at 0.7. From the findings the Cronbach alpha was above the acceptable threshold of 0.7. The study gathered both quantitative and qualitative data. Data was analyzed using both descriptive and inferential statistics. In descriptive statistics, percentages, frequencies, measures of central tendency (mean), and measures of dispersion were all employed. Inferential statistics was performed using Pearson's correlation coefficient and multiple regressions. The result of analyzed quantitative data was presented in form of tables and charts. The study concluded that there is a strong positive and significant relationship between budgeting practices and access to financial credit by SMEs in Kisumu City CBD. The study recommended that budgeting techniques should be utilized to achieve specific purposes and grand goal of the enterprise.
Key Words: Budgeting Practice, SMEs and Access to Financial Credit
CITATION: Owilli, E. A.,Korir, S., & Mongare, O. (2024). Effect of budgeting practice on SMEs access to financial credit in Kisumu City CBD. The Strategic Journal of Business & Change Management, 11 (4), 953 – 960. http://dx.doi.Org/10.61426/Sjbcm.v11i4.3131
Full Text:
PDFReferences
Agoglia, C. P. (2019). Effective Budgeting Practices for SMEs: Managing Finances Efficiently. Journal of Small Business Finance, 23(3), 451-472.
Balagobei, S. (2020). Budgeting Practices and Financial Management in SMEs. International Journal of Financial Studies, 8(2), 99-118.
Biddle, F., & Hilary, M. (2012). Disclosure theories and disclosure measures. Spanish Journal of Finance and Accounting/Revista Española de Financiación y Contabilidad, 39(147), 393-420.
Galindo, A., & Schiantarelli, F. (2019). Creditworthiness and Financial Flexibility in SMEs. Journal of Financial Analysis, 27(3), 345-367.
Horngren, C. T., Sundem, G. L., & Stratton, W. O. (2019). Introduction to Management Accounting. Pearson.
Ittner, C. D., & Larcker, D. F. (2018). Financial Reporting Practices in Jordanian SMEs: Compliance and Challenges. Journal of International Accounting Research, 17(1), 34-58.
Jayaraman, R., & Ismail, A. (2018). Collateral and Credit Access in Business Financing. International Journal of Banking and Finance, 12(2), 198-215.
Makau, M. S., Wawire, N. H., & Ofafa, G. A. (2017). Cash Basis vs. Accrual Accounting in Kenyan SMEs. African Journal of Accounting, Auditing and Finance, 9(1), 15-35.
Maksoud, A. (2019). Resource Allocation and Financial Target Setting in SMEs. Strategic Finance Journal, 15(4), 305-322.
Mohamed, A., & Kerosi, E. (2018). Recurrent Budgeting Practices and Financial Performance in SMEs. Journal of Finance and Accounting, 10(2), 178-195.
Mugambi, F. M. (2019). The Role of Accounting Software in Enhancing Financial Performance of Kenyan SMEs. East African Business Research Journal, 13(2), 289-312.
Nafisatu, A. (2020). The Role of Capital Budgeting in Long-Term Planning for SMEs. Journal of Investment and Finance, 15(3), 243-262.
Onduso, J. (2017). Cash Budgeting and Cash Flow Management in Small and Medium Enterprises. Journal of Business and Financial Affairs, 12(4), 301-320.
Uyar, A. (2015). Budgeting Practices in Nigerian SMEs: The Shift from Manual to Software Solutions. Nigerian Journal of Business and Social Sciences, 11(4), 257-276.
DOI: http://dx.doi.org/10.61426/sjbcm.v11i4.3131
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.