Microfinance Credit Accessibility and Financial Performance of Small and Medium Enterprises in Machakos County, Kenya

Muema Joseph Munguti(1*), Lucy Wamugo(2),

(1) Kenyatta University
(2) Kenyatta University
(*) Corresponding Author


SMEs in Machakos County have been characterized by poor financial performance which has been linked to financial access. Financial access is one of the keys that drive the development of SME in the country, particularly access to bank financing since banking sector plays a key role in serving this segment. This study specifically sought to determine the influence of collateral security, loan-income ratio and geographical branch penetration on financial performance of SMEs. Study adopted census survey due to small population size. Respondents were supplied with semi-structured questionnaires with aim of getting their views regarding financial accessibility and SME performance. Findings of the study indicated that collateral security, loan-income ratio, and geographical branch penetration has a significant positive effect on financial performance in Machakos County, Kenya. This research recommends that SME’s should improve their core capital, strengthen their financial management practices, foster financial innovation, and literacy within firms.


financial performance; SMEs; geographical penetration; collateral security

Full Text:



Abayo, J. A., & Oloko, M. (2017). Effect of micro-credit on growth of small business enterprises: A case of M-Shwari at Kibuye Market in Kisumu County, Kenya. Jomo Kenyatta University of Agriculture and Technology.

Amoah, B., Aboagye, A. Q., Bokpin, G. A., & Ohene‐Asare, K. (2018). Firm-Specific, Financial Development and Macroeconomic Determinants of Credit Union Lending. Journal of International Development, 30(7), 1203-1222.

Azende, T., (2012). Risk Management and Insurance of Small and Medium Scale Enterprises (SMEs) in Nigeria. International Journal of Finance and Accounting, 1(1), 8-17.

Badulescu, D. (2012). Collateral in SMEs’ Lending: Banks’ Requirements Vs Customers’ Expectations. The Journal of the Faculty of Economics. University of Oradea, 3(2) 493-499.

Ghimire, B., & Abo, R. (2013). An empirical investigation of Ivorian SMEs access to bank finance: Constraining factors at demand-level. Journal of finance and investment analysis, 2(4), 29-55.

Gichuki, A., Njeru, A., & Tirimba, O. (2014). Challenges Facing Micro and Small Enterprises in Accessing Credit Facilities in Kangemi Harambee Market in Nairobi City County, Kenya.

Githui O. (2012), “The impact of credit risk management on financial performance of commercial banks in Kenya” (Unpublished MBA Thesis). University of Nairobi.

Iopev, L., & Kwanum, I. M. (2012). An assessment of risk management of small and medium scale enterprises in Nigeria. Research Journal of Finance and Accounting, 3(5), 151-159.

Kanyare, N., & Mungai, J. (2017). Access to microcredit determinants and financial performance of small and medium retailing enterprises in Wajir county, Kenya. International Journal of Finance, 2(6), 103-136.

Kithinji, A.M. (2010). Credit Risk Management and Profitability of Commercial Banks in Kenya, (Unpublished MBA Project), School of Business, University of Nairobi, Kenya.

Mugenda, A. G. (2013). Qualitative research methods.

Muguchu, M. (2013). Relationship between access to credit and financial performance of small and medium enterprises in Nairobi, Kenya. Unpublished MBA Project.

Muturi, E., & Rotich, G. (2016). Effect of Credit Management Practices on Loan Performance in Deposit Taking Microfinance Banks in Kenya. International Journal of Innovations, Business and Management (IJIBM), 10(1).

Nkuah, J. K., Tanyeh, J. P., & Gaeten, K. (2013). Financing small and medium enterprises (SMEs) in Ghana: challenges and determinants in accessing bank credit. International Journal of Research in Social Sciences, 2(3), 12-25.

Onaolapo, A. R. (2012), “Analysis of credit risk management efficiency in Nigerian commercial banking sector” Far East Journal of Marketing and Management, 1 (5).

Quartey, P., Turkson, E., Abor, J. Y., & Iddrisu, A. M. (2017). Financing the growth of SMEs in Africa: What are the constraints to SME financing within ECOWAS? Review of development finance, 7(1), 18-28.

Shah, A., & Braganza, M. F. (2013). Factors influencing the uptake of loans: A correlation descriptive Analysis. International Conference on Industrial Engineering and Operations Management, (pp. 492-498). Britain.

Vera, D., & Onji, K. (2010). Changes in the Banking System and Small Business Lending. Small Business Economics, 34(3), 293-308.

Waari, D. N., & Mwangi, W. M. (2015). Factors influencing access to finance by micro, small and medium enterprises in Meru County, Kenya. International Journal of Economics, Commerce and Management, 3(4), 1-15.

Wanjohi, A. M. (2010). Challenges Facing SMEs in Kenya and the Efforts in Progress. SME PAPERS

World Bank. (2015). Small and Medium Enterprises (SMEs) Finance. Washington, D.C.

DOI: http://dx.doi.org/10.33019/ijbe.v4i1.250

Article Metrics

Abstract view : 702 times
PDF - 433 times


  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Creative Commons License

Integrated Journal of Business and Economics is licensed under a Creative Commons Attribution 4.0 International License.