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Nasteha Kanyare, Dr. John Mungai


Purpose:  The purpose of the study was to establish the effect of determinants of access to microcredit on financial performance of retailing SMEs in Wajir County, Kenya.

Methodology: The study adopted a descriptive survey research design. The target population comprised of all the 5000 retailing small and medium enterprises in Wajir County where the units of analysis were the SME owners. The study used stratified random sampling and simple random sampling technique to come up with the sample. The target population was stratified into 6 strata (the 6 sub-counties in Wajir County). Further, random sampling was used to select 146 SMEs from each sub-county. The study used primary data which was largely quantitative and descriptive in nature. The questionnaires were self-administered with the help of two research assistants. The data analysis was undertaken using SPSS Version 20 where the statistics generated included descriptive statistics and inferential statistics.

Results: The study findings revealed that savings, meeting the eligibility criterion, loan structuring and some socio economic characteristics positively and significantly affected the financial performance of SMEs in Wajir County.

Unique contribution to theory, practice and policy: the study recommended that SMEs should take the initiative to increase the amount they saved so that they could increase their borrowing capacity. The study also recommended that SME owners needed to take the initiative of ensuring that they were all the time able to meet the necessary requirements needed for obtaining loans especially their documentation, business and repayment plans and aim at ensuring that they acquired the necessary collateral. It was further recommended that MFIs needed to ensure that the loan structure presented to SMEs were favorable. The study also recommended that it was necessary for SMEs to expand/grow their asset base so as to increase the ability to repay the loans. They also needed to expand their networks especially within the financial institutions circles so that they could increase the trust the MFIs had on them and for easy considerations for loans.

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access, microcredit, loan structuring, savings, eligibility criterion, socio economic characteristics, financial performance

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