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FACTORS HINDERING SMES FROM ACCESSING THE FINANCIAL PRODUCTS OFFERED BY BANKS

Michael Njeru Njue, Marion Mbogo

Abstract


Abstract

Purpose: The purpose of this study was to highlight the factors hindering SMES from accessing the financial products offered by banks.

Methodology:The research design was descriptive survey study. The target population was 46 commercial banks .The sampling frame was the list of commercial banks given at the Central bank of Kenya Website. A sample of 17 banks was selected using random sampling. The second stage of sampling involved the selection of the respondents using a stratified sampling approach. The strata were the various departments that interact with SMEs in a bank. The respondents were the head of departments of the respective departments that form the strata. Both qualitative and quantitative data was collected using a questionnaire that consisted of both open ended and close ended questions. Data was analyzed using Statistical Package for Social Sciences (SPSS.

Results:It can be concluded that there were several factors that hindered SMEs access to financial products and services. In particular these factors included lack of credit worthiness information about SMES, lack of collateral limits the SME access to finance, low net value of the entrepreneurs in terms of assets and liabilities (Capital) limits SME access to finance borrower’s lack of honesty and trustworthiness (character) limits SME access to finances.

Unique contribution to theory, practice and policy:The study recommended that training be emphasized to SME entrepreneurs on financial matters, all gender to be treated equally, the banks to introduce financial education programs for SMEs to improve their access to credit, banks to further make use of a credit scoring system to assess the credit worthiness of small businesses and to introduce the use of new credit bureau regulations to increase SME finances.



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Keywords


financial products,small and medium enterprise

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References


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