| dc.description.abstract | Though micro-finance institutions and markets literature show non-financial services,
savings mobilization and micro-credit loans as important aspect of enhancing SMEs
growth and sustainability, the effect of non-financial services on gro,wth of SMEs is
unknown. Prior studies fail to link savings mobilization to SMEs growth and it is
unknown how micro-credit loans associate with growth of SMEs. The purpose of this
study was therefore to establish the effect of micro-finance services on performance of
Small and medium enterprises in Kisumu East District, Kenya. The objectives of the
study were to; determine the effect of non-financial services on growth of SMEs,
establish the relationship between savings mobilization and growth of SMEs and assess
the effect of micro-credit loans on growth of SMEs in Kisumu East District. The study
was guided by a conceptual framework, in which micro-finance services was the
independent variable, SMEs growth as 'the dependent variable. The study adopted
correlational research designs. The population comprised of all the 2,232 SMEs within
Kisumu East District. Stratified random sampling was used to pick a sample of 339
SMEs. Primary and data was collected through a structured questionnaire and desk
review respectively. Instrument validation and reliability was done using expert review
and Cronbach's Alpha reliability test respectively where all variables had alpha
coefficient of above 0.7 indicating internal consistency. Data was analyzed inferential
statistics namely Pearson's correlation and multiple regression analyses. The findings of
the study were presented in tables, charts and graphs. The study findings were that nonfinancial
services were negative significant predictor of growth of SMEs (P = -.094 (p =
.087) implying that intensifying non-financial services leads to decline in growth of
SMEs; savings mobilization had negative significant predictor of growth of SMEs (P = -
.121 (p = .009) meaning that increased savings mobilization leads to reduced growth of
SMEs and micro-credit loans had a positive significant association with growth leveler =
0.288, p =.000) implying that increase in micro-credit loans leads to improved growth in
SMEs. The study concludes that; enhancing non-financial services given to SMEs leads
to decline in growth of these SMEs; intensifying savings mobilization by SMEs leads to
decline in growth of these SMEs and increasing micro-credit loans given to SMEs leads
to improved growth of these SMEs. The study recommends that; SMEs in Kisumu East
District should de-emphasize non-financial services; reduce their mobilized savings and
seek more micro-credit loans. The research findings may be significant to SME financing
policy makers in designing appropriate micro-credit products that maximize the firm's
value. It may also be useful to entrepreneurs in making optimal financial structure
decisions and provide new empirical evidence on the micro-finance services and
performance of SMEs and form a basis for future research in the area | en_US |
