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Moderating Effect of Business Size and Age on the Relationship between Financial Literacy and Financial Performance of Craft Micro Enterprises in Kisii County, Kenya

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  • Dr. Kenyanya Patrick Nyatete, Ph.D.

    (Department of Accounting and Finance, Maseno University, Kenya)

  • Dr. Mule Robert Kisavi, Ph.D.

    (Department of Accounting and Finance, Maseno University, Kenya)

Abstract

Craft micro enterprises contribute up to 20% to employment and 15% to Gross Domestic Product (GDP) in emerging economies through tax revenue and foreign exchange. In spite of funding and training interventions by stakeholders, statistics indicate that financial performance of craft micro enterprises is on a rapid decline, especially in the soapstone-based micro enterprises in Kisii, which poses a risk to both Kenya’s GDP, and the many residents in the area who depend on the industry for survival. Although several studies have attempted to establish the cause of this poor performance, the endogenisation of both business size and age as moderating factors on the relationship between financial literacy and financial performance of the craft micro enterprises in Kisii has received far less attention empirically. The objective of the present study was therefore to investigate the moderating effect of business size and age on the relationship between financial literacy and financial performance of the craft micro enterprises. Using a correlational research design, the study targeted 532 entrepreneurs operating under 23 registered self-help groups. Stratified random sampling was employed to select 228 respondents for the study. Primary data was collected using structured questionnaires. Results showed that business size has a significant moderating effect on the relationship between financial literacy and financial performance of the craft micro enterprises. It is recommended that stakeholders in the craft industry in the soapstone industry should enhance financial literacy trainings to the entrepreneurs and increase financing to grow the enterprises if they seek to improve their financial performance.

Suggested Citation

  • Dr. Kenyanya Patrick Nyatete, Ph.D. & Dr. Mule Robert Kisavi, Ph.D., 2020. "Moderating Effect of Business Size and Age on the Relationship between Financial Literacy and Financial Performance of Craft Micro Enterprises in Kisii County, Kenya," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(8), pages 819-823, August.
    • Handle: RePEc:bcp:journl:v:4:y:2020:i:8:p:819-823
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    References listed on IDEAS

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    2. Joaquim J.S. Ramalho & Jacinto Vidigal da Silva, 2009. "A two-part fractional regression model for the financial leverage decisions of micro, small, medium and large firms," Quantitative Finance, Taylor & Francis Journals, vol. 9(5), pages 621-636.
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