Effects of microfinance services on the performance of small and medium enterprises in Kenya

doi:10.5897/AJBM2014.7519

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Effects of microfinance services on the performance of small and medium enterprises in Kenya

Journal Article•DOI•

Effects of microfinance services on the performance of small and medium enterprises in Kenya

Irene Rotich, Charles Lagat, Japhet Kogei

14 Mar 2015-African Journal of Business Management (Academic Journals)-Vol. 9, Iss: 5, pp 206-211

TL;DR: In this paper, the effects of micro-finance services on the performance of MSMEs using an explanatory research design was reviewed. And the authors concluded that increasing provision levels of micro finance will result in increased performance of micro enterprise.

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Abstract: The Micro, Small and Medium Scale Enterprises (MSMEs) sector in Kenya has grown tremendously over the last two decades but its growth is characterized by low productivity and survivalist enterprises. The sector is however very strategic in providing future employment for the economy. This paper reviews the effects of microfinance services on the performance of MSMEs using an explanatory research design. The study targeted 429 MSMEs registered by the Kiambu Municipal Council and sampled 270 enterprises. The study utilized multiple regression analysis set draw inferences on the study using SPSS statistical package. The study found access to savings schemes, managerial training and loan grace period to be statistically significant in determining the performance of MSMEs. This study concludes that increasing provision levels of micro finance will result in increased performance of micro enterprise. The study makes recommendations for microfinance service providers and policy development partners. Key words: Microfinance, MSMEs, enterprises, performance, financial services.

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Journal Article•DOI•

SME financing innovation and SME development in Bangladesh: an application of ARDL

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Md. Qamruzzaman¹, Wei Jianguo¹•Institutions (1)

Wuhan University of Technology¹

02 Nov 2019-Journal of small business and entrepreneurship

TL;DR: In this paper, the authors explore new evidence about financial innovation in small and medium enterprises (SME) financing impact on SME development in Bangladesh from 1985 to 2016, and propose a model to evaluate the impact of financial innovation on SMEs.

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Abstract: With this study, we try to explore new evidence about financial innovation in small and medium enterprises (SME) financing impact on SME development in Bangladesh from 1985 to 2016. To bring insigh...

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36 citations

Cites background from "Effects of microfinance services on..."

...Capital adequacy and revenue maximization are positively correlated (Rahmat and Maulana 2006; AkotoSampong 2011; Fauster 2014; Irene, Charles, and Japhet 2015)....
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Dissertation•

Microfinance Institutions’ Social Intermediation and Micro and Small Enterprises Survival in Thika Town, Kenya

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Zabron Chege Wairimu, Shadrack Mwenda Mwilaria

01 May 2017

TL;DR: In this paper, a research project submitted to the Department of Economic Theory in Partial Fulfillment of the Requirement for the Award of the Degree of Masters of Economics in Policy and Management, of Kenyatta University July, 2017

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Abstract: A Research Project Submitted to the Department of Economic Theory in Partial Fulfillment of the Requirement for the Award of the Degree of Masters of Economics in Policy and Management, of Kenyatta University July, 2017

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10 citations

Journal Article•DOI•

Perceptions of community-based field workers on the effect of a longitudinal biomedical research project on their sustainable livelihoods

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Christabelle S. Moyo¹, Joseph Francis¹, Pascal O. Bessong¹•Institutions (1)

University of Venda¹

17 Mar 2017-BMC Public Health

TL;DR: The MAL-ED South Africa, biomedical research project, had positive effects on tangible and intangible assets that compose the sustainable livelihoods of community-based fieldworkers, however, the field workers expressed the need to acquire social skills to enable them carry out their duties more efficiently.

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Abstract: Researchers involved in biomedical community-based projects rarely seek the perspectives of community fieldworkers, who are the ‘foot soldiers’ in such projects. Understanding the effect of biomedical research on community-based field workers could identify benefits and shortfalls that may be crucial to the success of community-based studies. The present study explored the perceptions of community-based field workers on the effect of the Etiology, Risk Factors and Interactions of Enteric Infections and Malnutrition and the Consequences for Child Health and Development Project" (MAL-ED) South Africa on their tangible and intangible capital which together comprise sustainable livelihoods. The study was conducted in Dzimauli community in Limpopo Province of South Africa between January-February 2016. The sustainable livelihoods framework was used to query community-based field workers’ perspectives of both tangible assets such as income and physical assets and intangible assets such as social capital, confidence, and skills. Data were collected through twenty one individual in-depth interviews and one focus group discussion. Data were analysed using the Thematic Content Analysis approach supported by ATLAS.ti, version 7.5.10 software. All the field workers indicated that they benefitted from the MAL-ED South Africa project. The benefits included intangible assets such as acquisition of knowledge and skills, stronger social capital and personal development. Additionally, all indicated that MAL-ED South Africa provided them with the tangible assets of increased income and physical assets. Observations obtained from the focus group discussion and the community-based leaders concurred with the findings from the in-depth interviews. Additionally, some field workers expressed the desire for training in public relations, communication, problem solving and confidence building. The MAL-ED South Africa, biomedical research project, had positive effects on tangible and intangible assets that compose the sustainable livelihoods of community-based fieldworkers. However, the field workers expressed the need to acquire social skills to enable them carry out their duties more efficiently.

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7 citations

Cites background from "Effects of microfinance services on..."

...This supports the argument that lack of assets among the rural poor reduces their access to credit [22]....
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...livelihoods [22] and rely on their accumulated assets as collateral when they apply for loans from micro-finance...
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Posted Content•

Access to Formal Credit and Enterprise Performance in Nigeria: A Gender Perspective

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Emmanuel O. Nwosu¹, Anthony Orji¹•Institutions (1)

University of Nigeria, Nsukka¹

01 Jan 2016-Social Science Research Network

TL;DR: In this paper, the impact of access to formal credit on enterprise performance has been investigated, showing that firms that are credit constrained have significantly lower output per worker, capital per worker and investment in fixed assets for expansion compared to those that are not credit constrained.

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Abstract: The main focus of this study is to ascertain the impact of access to formal credit on enterprise performance. The study uses Nigerian Enterprise Surveys data for 2010 to construct a direct measure of credit constraint. From propensity score estimations, the results show that access to formal credit matters and has a significant impact on enterprise performance indicators. Firms that are credit constrained have significantly lower output per worker, capital per worker, employment of labour and investment in fixed assets for expansion compared to firms that are not credit constrained. This is more pronounced for women-owned enterprises after adjusting for bias in the estimations and controlling for sampling weights. This suggests that one way to support the growth of enterprises in Nigeria is to make access to formal credit less stringent. Also, government and monetary authorities should support credit expansion policies for medium and small enterprises in Nigeria.

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6 citations

Journal Article•DOI•

Globalisation, enterprise and knowledge: education, training and development in Africa: Kenneth King & Simon McGrath, Symposium Books Oxford, 2002, ISBN 1 873927 49 5, 230 pages, Cost not given

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Terry Allsop

01 Mar 2004-International Journal of Educational Development

5 citations

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Monograph•DOI•

The microfinance revolution: sustainable finance for the poor.

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Marguerite S. Robinson

31 May 2001

1,160 citations

"Effects of microfinance services on..." refers background in this paper

...Microfinance is also defined as provision of small- scale financial services to the low- income people (Robinson, 2001; Nair, 2001)....
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Book•

The Performance Prism: The Scorecard for Measuring and Managing Business Success

[...]

Andy Neely, Chris Adams, Mike Kennerley

01 Jan 2003

TL;DR: In this article, the authors take a radically different look at performance measurement and set out explicitly to identify how managers can use measurement data to improve business performance, including strategies, strategies, processes, capabilities and stakeholder contribution.

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Abstract: This book takes a radically different look at performance measurement and sets out explicitly to identify how managers can use measurement data to improve business performance. The key features of the proposed book are: * Critical reviews of the major measurement frameworks available today - including the balanced scorecard, the business excellence model and shareholder value analysis. * Introduction of a new measurement framework - the performance prism - that addresses the shortcomings of the exisiting measurement frameworks. * Explanation of the tools, techniques and methodologies that can be used to measure stakeholder satisfaction, strategies, processes, capabilities and stakeholder contribution - the five facets of the performance prism. * Explanation of how managers can make the most of their measurement data. Specific discussions about how managers can analyse business performance data and identify appropriate improvement priorities. OUTLINE Chapter 1 - The Measurement Crisis This chapter will explore why measurement is on management's agenda and review recent developments in the field. A key theme in the chapter will be the changing nature of the measurement crisis. In the 1980s, when people first started worrying about the effectiveness of their measurement systems, the problem was that we were measuring the wrong things. Today the problem is that we are measuring too much. The chapter will explore this theme and encourage management to take a step back and think clearly about what they want from their measurement systems. Chapter 2 - The Measurement Frameworks This chapter will review the major measurement frameworks that are available today and identify their strengths and weaknesses. Frameworks to be covered will include the balanced scorecard, the business excellence model, shareholder value. A key theme that will run throughout the chapter will be the fact that each of these measurement frameworks offers a partial view of business performance. Chapter 3 - The Performance Prism This chapter will introduce a new, comprehensive measurement framework - the performance prism. The prism looks at measurement from a stakeholder perspective. When deciding what to measure managers have to first identify who their stakeholders are and what they want and need. Only then can they begin to decide what they should measure. Many of the existing works on measurement fail to recognise this, with numerous authors suggesting that measures should be derived from strategy. Measures should be consistent with strategy, but they should not be derived from strategy. Organisations have strategies because they want to deliver value to stakeholders. Hence the starting point for any discussion of measurement has to be stakeholders. The chapter on the performance prism will build upon this theme and explain how the performance prism provides a structure that encourages managers to answer five inter-related questions when designing their measurement systems: * Stakeholder satisfaction - who are the stakeholders and what do they want and need? * Strategies - what strategies do we need to deliver value to stakeholders? * Processes - what processes do we require to deliver these strategies? * Capabilities - what capabilities do we require to execute these processes? * Stakeholder contribution - what do we want and need from our stakeholders to enable all of the above to happen? Chapter 4 - Measuring Stakeholder Satisfaction This chapter will explore developments in the measurement of stakeholder satisfaction - investors, customers, employees, suppliers, regulators and local communities. Chapter 5 - Measuring Strategies This chapter will explore developments in the measurement of strategy - especially execution and effectiveness. Chapter 6 - Measuring Processes This chapter will explore developments in the measurement of processes - especially those associated with generating demand, fulfilling demand, developing new products and services and planning and managing the enterprise. Chapter 7 - Measuring Capabilities This chapter will explore developments in the measurement of capabilities - combinations of technology, people, practices and infrastructure. Chapter 8 - Measuring Stakeholder Contribution This chapter will explore developments in the measurement of stakeholder contribution - investment levels, customer and employee loyalty, supplier performance. Chapter 9 - Analysing Performance Data This chapter will build on the previous chapters by illustrating how performance data can be analysed once the data has been captured. Various tools, techniques and methodologies will be discussed and explained. There will be a strong emphasis throughout the chapter on the practicalities of making the most of measurement data. Chapter 10 - Improving Business Performance This chapter will concentrate on how to drive improvements in business performance following a systematic analysis of the data. Practical examples will be offered throughout that will illustrate how particular firms have used their measurement data. Appendix - The Measures Catalogue The authors have been working together over a period of months to construct a catalogue of best practice performance measures that identifies specific measures of performance that organisations can use to monitor their progress. The catalogue is structured around the performance prism framework and is currently available on the web (www.cranfield.ac.uk/som/cbp). While it would be impossible to include a paper copy of the catalogue as an appendix, it might be possible to offer it on a CD as further value added feature of the book.

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1,004 citations

"Effects of microfinance services on..." refers background in this paper

...Effectiveness and efficiency are the two fundamental dimensions of performance (Neely et al., 2002)....
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Journal Article•DOI•

The impact of group lending in Northeast Thailand

[...]

Brett E. Coleman¹•Institutions (1)

Asian Development Bank¹

01 Oct 1999-Journal of Development Economics

TL;DR: The authors used data from a quasi-experiment conducted in Northeast Thailand in 1995-1996 and found that program loans are having little impact although naïve estimates of impact that fail to account for self-selection and endogenous program placement significantly overestimate impact.

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614 citations

"Effects of microfinance services on..." refers background in this paper

...Coleman (1999) also finds little evidence of an impact on the programme participants....
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Book•

Complete Business Statistics

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Amir D. Aczel, Jayavel Sounderpandian

01 Jan 1989

TL;DR: Amir Aczel and Jayavel Sounderpandian as mentioned in this paper, Complete Business Statistics 6/e Table of Contents 0 Working with Templates1 Introduction and Descriptive Statistics2 Probability3 Random Variables4 The Normal Distribution5 Sampling and Sampling Distributions6 Confidence Intervals7 Hypothesis Testing8 The Comparison of Two Populations9 Analysis of Variance10 Simple Linear Regression and Correlation11 Multiple Regression

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Abstract: Amir Aczel and Jayavel Sounderpandian, Complete Business Statistics 6/e Table of Contents0 Working with Templates1 Introduction and Descriptive Statistics2 Probability3 Random Variables4 The Normal Distribution5 Sampling and Sampling Distributions6 Confidence Intervals7 Hypothesis Testing8 The Comparison of Two Populations9 Analysis of Variance10 Simple Linear Regression and Correlation11 Multiple Regression and Correlation12 Time Series, Forecasting, and Index Numbers13 Quality Control and Improvement14 Nonparametric Methods and Chi-Square Test15 Bayesian Statistics and Decision AnalysisAppendicesA: ReferencesB: Answers to Most Odd-Numbered ProblemsC: Statistical TablesOn the CD16 Sampling Methods17 Multivariate Analysis

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572 citations

"Effects of microfinance services on..." refers background or methods in this paper

...A study by Amin et al. (2003) used a unique panel dataset from northern Bangladesh with monthly consumption and income data for 229 households before they received loans. They found that while microcredit is successful in reaching the poor, it is less successful in reaching the vulnerable, especially the group most prone to destitution (the vulnerable poor). Coleman (1999) also finds little evidence of an impact on the programme participants. The results, Coleman further explains, are consistent with Adams and von Pischke’s assertion that “debt is not an effective tool for helping most poor people enhance their economic condition” and that the poor are poor because of reasons other than lack of access to credit. According to Mosley (1999), microfinance makes a considerable contribution to the reduction of poverty through its impact on income and also has a positive impact on asset level. But the mechanism through which poverty reduction works varies between institutions. Generally, institutions that give, on average, smaller loans reduce poverty much more by lifting borrowers above the poverty line, whilst institutions giving larger loans reduce it much more by expanding the demand for labour amongst poor people. Hulme and Mosley (1998) found evidence of a trade-off between reaching the very poor and having substantial impact on household income. They found that programmes that targeted higher-income households (those near the poverty level) had a greater impact on household income. Mosley (2001), in his research on microfinance and poverty in Bolivia, assessed the impact of microfinance on poverty, through small sample surveys of four microfinance institutions. Two urban and two rural, using a range of poverty concepts such as income, assets holdings and diversity, and different measures of vulnerability. All the institutions studied had on average, positive impacts on income and asset levels, with income impacts correlating negatively with income on account of poor households choosing to invest in low-risk and lowreturn assets. The studies revealed also that in comparison with other anti-poverty measures, microfinance appears to be successfully and relatively cheap at reducing the poverty of those close to the poverty line. However, it was revealed to be ineffective, by comparison with labour-market and infrastructural measures, in reducing extreme poverty. Nichols (2004) used a case study approach to investigate the impact of microfinance upon the lives of the poor in the rural China and found that the participation of poor in MFI program had led to positive impact in their life....
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...A study by Amin et al. (2003) used a unique panel dataset from northern Bangladesh with monthly consumption and income data for 229 households before they received loans. They found that while microcredit is successful in reaching the poor, it is less successful in reaching the vulnerable, especially the group most prone to destitution (the vulnerable poor). Coleman (1999) also finds little evidence of an impact on the programme participants....
[...]
...A study by Amin et al. (2003) used a unique panel dataset from northern Bangladesh with monthly consumption and income data for 229 households before they received loans. They found that while microcredit is successful in reaching the poor, it is less successful in reaching the vulnerable, especially the group most prone to destitution (the vulnerable poor). Coleman (1999) also finds little evidence of an impact on the programme participants. The results, Coleman further explains, are consistent with Adams and von Pischke’s assertion that “debt is not an effective tool for helping most poor people enhance their economic condition” and that the poor are poor because of reasons other than lack of access to credit. According to Mosley (1999), microfinance makes a considerable contribution to the reduction of poverty through its impact on income and also has a positive impact on asset level....
[...]
...Aczel (2000) conducted a study in Thailand on the role of microfinance in supporting micro entrepreneurial endeavor. The findings of the study indicated that the involvement of microfinance institutions in promotion of micro enterprise and processing industry plays a key role in economies of developed countries as a source of goods and services, income, savings and employment. Mochona (2006) studied the impact of microfinance in Addis Ababa-Ethiopia. He assessed the impact of microfinance on women micro enterprises that were clients of Gasha Microfinance Institution. The research findings indicated that only a few of the women clients of the Gasha Microfinance Institution reported increased incomes from their micro enterprise activities. Rahmat and Maulana (2006) researched on the Impact of Microfinance to Micro and Small Enterprise’s Performance Indonesia. Bowen et al. (2009) researched on Management of business challenges among small and micro enterprises in Nairobi Kenya....
[...]
...A study by Amin et al. (2003) used a unique panel dataset from northern Bangladesh with monthly consumption and income data for 229 households before they received loans. They found that while microcredit is successful in reaching the poor, it is less successful in reaching the vulnerable, especially the group most prone to destitution (the vulnerable poor). Coleman (1999) also finds little evidence of an impact on the programme participants. The results, Coleman further explains, are consistent with Adams and von Pischke’s assertion that “debt is not an effective tool for helping most poor people enhance their economic condition” and that the poor are poor because of reasons other than lack of access to credit. According to Mosley (1999), microfinance makes a considerable contribution to the reduction of poverty through its impact on income and also has a positive impact on asset level. But the mechanism through which poverty reduction works varies between institutions. Generally, institutions that give, on average, smaller loans reduce poverty much more by lifting borrowers above the poverty line, whilst institutions giving larger loans reduce it much more by expanding the demand for labour amongst poor people. Hulme and Mosley (1998) found evidence of a trade-off between reaching the very poor and having substantial impact on household income....
[...]

Journal Article•DOI•

Microenterprise finance: Is there a conflict between growth and poverty alleviation?

[...]

Paul Mosley¹, David Hulme²•Institutions (2)

University of Reading¹, University of Manchester²

01 May 1998-World Development

TL;DR: In this article, the impact of micro-finance on the recipient household's income was investigated in seven developing countries and the authors attempted to relate such impact to the institutions' design features.

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454 citations