IDEAS home Printed from https://ideas.repec.org/a/hur/ijaraf/v4y2014i4p249-262.html
   My bibliography  Save this article

The Role of Micro-Finance Institutions to the Growth of Micro and Small Enterprises (MSE) in Thika, Kenya (Empirical Review of NonFinancial Factors)

Author

Listed:
  • Paul Munene Muiruri

Abstract

Micro and small enterprises (MSE) known as Jua Kali are the biggest employer in Kenya and accounts for 10 million and 8.3 million of this number are in the informal sector. It also continues to employ more each year–at an average rate of about two percent (ICPAK, 2010). This research report present specific insights on the contribution of microfinance service to the growth of MSEs in developing countries. The study sought to investigate the role of microfinance institutions on growth of micro and small enterprise (MSE) in Thika Municipality, Kenya. This was motivated by the need to fill-up the academic gap on contribution of microfinance services left by previous researchers. In order to achieve the study objective, a cross-sectional survey was carried that analyzed both secondary and primary data. Through random sampling technique, two hundred and eighty five MSEs and sixteen MFIs were selected. This included MSEs Owners and MFI managers, it represents 25.8 percent of the total MSE Owners as of 2009 Thika Municipal record was considered representative and reliable for generalization. Data collection was done using questionnaires and interview schedules to the different respondents. After the data was collected it was entered and cleaned before being analyzed using the statistical packages for social sciences software (SPSS windows version 13.0). The findings are presented using both tabular and graphical presentation. Statistics in the study demonstrate that MFIs offer services to customers (MSEs) had contributed growth which has been rapid over the years. Majority of businesses in Thika Municipality (56.8 percent) were owned by married people. Default rate was high while MFI loan was second main source of capital (38.6percent) contrary to Oketch (1995). The main reason for their saving was for expansion of and growth of business the same sentiments echoed by Jagongo (2009). Finally, 76.9 percent business was initiated with capital less than ten thousand Kenyan shillings. This low seed capital explains why MSEs have stagnant growth. Finally the businesses that received MFI services reported growth in sale, revenue and number of employees employed. The study recommended that government should set policy regarded essential in improving loan repayment period and loan amount. From research it is clear that there exists a large unexploited saving mobilization and utilization potential.

Suggested Citation

  • Paul Munene Muiruri, 2014. "The Role of Micro-Finance Institutions to the Growth of Micro and Small Enterprises (MSE) in Thika, Kenya (Empirical Review of NonFinancial Factors)," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(4), pages 249-262, October.
    • Handle: RePEc:hur:ijaraf:v:4:y:2014:i:4:p:249-262
    as

    Download full text from publisher

    File URL: http://hrmars.com/hrmars_papers/Article_23_The_Role_of_Micro-Finance_Institutions.pdf
    Download Restriction: no
    File URL: http://hrmars.com/hrmars_papers/Article_23_The_Role_of_Micro-Finance_Institutions.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dinopoulos, Elias & Thompson, Peter, 1998. "Schumpeterian Growth without Scale Effects," Journal of Economic Growth, Springer, vol. 3(4), pages 313-335, December.
    2. Daniels, Lisa, 1999. "The role of small enterprises in the household and national economy in Kenya: A significant contribution or a last resort?," World Development, Elsevier, vol. 27(1), pages 55-65, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dejene Adugna Chomen, 2021. "The role of microfinance institutions on poverty reduction in Ethiopia: the case of Oromia Credit and Saving Share Company at Welmera district," Future Business Journal, Springer, vol. 7(1), pages 1-10, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guido Cozzi, 2008. "Why the Rich Should Like R&D Less," Working Papers 2009_14, Business School - Economics, University of Glasgow, revised Mar 2009.
    2. T. Gries & R. Grundmann & I. Palnau & M. Redlin, 2017. "Innovations, growth and participation in advanced economies - a review of major concepts and findings," International Economics and Economic Policy, Springer, vol. 14(2), pages 293-351, April.
    3. Cozzi, Guido & Pataracchia, Beatrice & Pfeiffer, Philipp & Marco, Ratto, 2017. "How much Keynes and how much Schumpeter? An Estimated Macromodel of the US Economy," Working Papers 2017-01, Joint Research Centre, European Commission.
    4. Wolf-Heimo Grieben, 2006. "Globalization with Labor Market Frictions and Non-Scale Growth," DEGIT Conference Papers c011_053, DEGIT, Dynamics, Economic Growth, and International Trade.
    5. Jian Zhang & Linxiu Zhang & Scott Rozelle & Steve Boucher, 2006. "Self‐Employment With Chinese Characteristics: The Forgotten Engine Of Rural China'S Growth," Contemporary Economic Policy, Western Economic Association International, vol. 24(3), pages 446-458, July.
    6. repec:bla:ecinqu:v:51:y:2013:i:3:p:1903-1912 is not listed on IDEAS
    7. Hélène Latzer & Kiminori Matsuyama & Mathieu Parenti, 2018. "The market Size Effect in Endogenous Growth Reconsidered," Documents de travail du Centre d'Economie de la Sorbonne 18032, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    8. Horii, R., 2000. "Emergence of New Industries and Endogenous Growth Cycles," ISER Discussion Paper 0510, Institute of Social and Economic Research, Osaka University.
    9. Chu, Angus C. & Furukawa, Yuichi & Wang, Xilin, 2022. "Rent-seeking government and endogenous takeoff in a Schumpeterian economy," Journal of Macroeconomics, Elsevier, vol. 72(C).
    10. Peretto, Pietro F., 1999. "Industrial development, technological change, and long-run growth," Journal of Development Economics, Elsevier, vol. 59(2), pages 389-417, August.
    11. Frederic Tournemaine & Pongsak Luangaram, 2012. "R&D, human capital, fertility, and growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(3), pages 923-953, July.
    12. Pene Zongabiro Nina Pelagie, 2014. "The Contribution of Village Palm Grove to the Cameroonian Rural Economic Development," Research in World Economy, Research in World Economy, Sciedu Press, vol. 5(2), pages 159-168, September.
    13. Constantine Alexandrakis, 2014. "Technological change and the U.S. real interest rate," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 38(4), pages 672-686, October.
    14. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-72.
    15. Leibowicz, Benjamin D., 2018. "Welfare improvement windows for innovation policy," Research Policy, Elsevier, vol. 47(2), pages 390-398.
    16. Katsuhiko Hori & Katsunori Yamada, 2013. "Education, Innovation and Long-Run Growth," The Japanese Economic Review, Japanese Economic Association, vol. 64(3), pages 295-318, September.
    17. Peter Howitt, 1999. "Steady Endogenous Growth with Population and R & D Inputs Growing," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 715-730, August.
    18. Guido Cozzi & Silvia Galli, 2014. "Sequential R&D and blocking patents in the dynamics of growth," Journal of Economic Growth, Springer, vol. 19(2), pages 183-219, June.
    19. Strulik, Holger & Prettner, Klaus & Prskawetz, Alexia, 2010. "R\&D-based Growth in the Post-modern Era," Hannover Economic Papers (HEP) dp-457, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    20. Grimaud, André, 2002. "Non Convexities, Imperfect Competition and Growth," IDEI Working Papers 150, Institut d'Économie Industrielle (IDEI), Toulouse.
    21. Stadler, Manfred, 2015. "Innovation, industrial dynamics and economic growth," University of Tübingen Working Papers in Business and Economics 84, University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hur:ijaraf:v:4:y:2014:i:4:p:249-262. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hassan Danial Aslam (email available below). General contact details of provider: http://hrmars.com/index.php/pages/detail/Accounting-Finance-Journal .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.