CREDIT APPRAISAL PROCEDURE ON CREDIT ACCESSIBILITY AMONG SMALL SCALE TRADERS IN GITHURAI MARKET, KENYA
Abstract
This study explored how credit appraisal methods affect credit access for small-scale traders in Githurai Market, Nairobi City County. The primary focus was on understanding the impact of appraisal factors, such as credit history, collateral, and income stability, on traders’ ability to secure financing. The sample included 169 small-scale traders and representatives from 9 financial institutions, including banks and microfinance institutions. The study revealed that collateral, credit scores, and business income are key determinants of credit access. Financial institutions tend to rely on traditional appraisal methods, making it challenging for small-scale traders, especially those lacking collateral or a strong credit history, to obtain loans. Qualitative findings underscored the need for financial literacy programs, simplified loan processes, and innovative credit scoring models to improve accessibility. Additionally, the study emphasized the potential of government-backed initiatives and partnerships between stakeholders to reduce information asymmetry and make credit more accessible to underserved traders. Supported by the Credit Channel Theory and Information Asymmetry Theory, the study recommended updating credit criteria to include non-traditional metrics, expanding government aid, fostering stakeholder collaboration, promoting financial literacy, streamlining loan applications, and creating partnerships with technology firms for innovative solutions. Further research is suggested to investigate alternative financing options and the impact of financial literacy on credit access.
Key Words: Accessibility, Collateral, Credit Appraisal, Credit History, Financial Literacy, Government Initiatives, Loan Procedures
CITATION: Chirchir, J. K., & Jagongo, A. (2024). Credit appraisal procedure on credit accessibility among small scale traders in Githurai Market, Kenya. The Strategic Journal of Business & Change Management, 11 (4), 1045 – 1165. http://dx.doi.org/10.61426/sjbcm.v11i4.3147
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DOI: http://dx.doi.org/10.61426/sjbcm.v11i4.3147
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