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Microfinance Services and Financial Performance of Top 100 Mid-Sized Firms in Nairobi City County, Kenya

Author

Listed:
  • Grace Mwikali Musyoki

    (Department of Accounting and Finance, School of Business, Kenyatta University.)

  • Dr. Ambrose Jagongo

    (Department of Accounting and Finance, School of Business, Kenyatta University.)

  • Dr. Hannah Bula

    (Department of Business Administration, School of Business, Kenyatta University.)

Abstract

With the current changes in the interest rate regimes small and medium enterprises are finding it challenging to access financial services from mainstream banks hence turning to microfinance institutions. This study sought after the impact of access to microfinance services on financial outcomes of Top 100 medium sized firms in Nairobi City County Kenya. This study which also adopted a descriptive research design; analyzing 21 reoccurring firms in the Top 100 medium sized firms in Nairobi City County Kenya as ranked by KPMG between 2016-2018. The general manager finance managers from each of the firms was the main units of analysis. The study utilized a census sampling of 42 of the respondents, relying on both data sources. The semi-structured questionnaire was the dominant research instrument, collecting secondary data from audited financial statements of the top 100 SMEs. The research applied descriptive statistics such as mean, standard deviation and coefficient of variation. Further the research utilized regression analysis and ANOVA tests in analysing the research hypothesis. The regression results led to the conclusion that 82.5% of financial outcome of the firms is predicted by microfinance services. The study further established that government regulations significantly moderated ow MFI initiatives relate to firm profitability. The posited that financial institutions such as Saccos and mainstream banks can develop products tailored to meeting the capital and entrepreneurial gaps in the SME industry. These will help in filling the gaps created with the slow-down in the growth of microfinance sector which cannot adequately bear the burden of supporting the SME industry. Further, in light of the current Covid pandemic, the central government should look at reviewing the now-stopped stimulus packages and moratorium on VAT and other taxes. This will be critical to the survival of the SME industry and driving firm performance.

Suggested Citation

  • Grace Mwikali Musyoki & Dr. Ambrose Jagongo & Dr. Hannah Bula, 2022. "Microfinance Services and Financial Performance of Top 100 Mid-Sized Firms in Nairobi City County, Kenya," International Journal of Science and Business, IJSAB International, vol. 15(1), pages 102-112.
    • Handle: RePEc:aif:journl:v:15:y:2022:i:1:p:102-112
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    References listed on IDEAS

    as
    1. Hezron Mogaka Osano & Hilario Languitone, 2016. "Factors influencing access to finance by SMEs in Mozambique: case of SMEs in Maputo central business district," Journal of Innovation and Entrepreneurship, Springer, vol. 5(1), pages 1-16, December.
    2. Sani, Habibu & Nohd-Khan, Shazida Jan & Zamzuri Noor, Mohd Saifoul, 2018. "Microfinance training and the number of loans received by SMEs. An empirical evidence from emerging economy," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 14(2), February.
    3. Habibu Sani & Shazida Jan Mohd-Khan & Mohd Saifoul Zamzuri Noor, 2018. "Microfinance training and the number of loans received by SMEs. An empirical evidence from emerging economy," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(2), pages 326-341, April.
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