Effects Of Financing Decisions On Performance Of Small Business Enterprises In Kenya

Abstract

Many small business enterprises perform poorly all over the world. The problem is rampant in Kenya where many small firms continuously experience a downward trend in performance. Many factors have been cited in literature for mass failure of these firms. However, the effects of financing decision on performance of small business enterprises in Kenya remain an enigma. Hence, the study sought to establish the effects of financing decisions on performance of small business enterprises in Kenya. The study which was hinged on investment theories adopted a descriptive research design. A population of all the registered 513 small business enterprises in Nyamira County were targeted. Simple random sampling was used to select a random sample of 154 respondents. Secondary data was obtained from annual reports and financial statements of small business enterprises. Primary data was collected using both closed and open ended questionnaires. Simple linear regression analysis was used to model the relationship among the study variables. On the basis of the sample data the study found that financing decision had a significant positive relationship with performance of SMEs. The results of this study are expected to mitigate losses through establishing robust financial management techniques for use in under-performing small business enterprises in Kenya. Moreover, the study could act as a platform for the survival of these firms as well as help them in the assessment of their financial conditions in case of rescue in order to achieve vision 2030 on financial services which is to create a successful and globally competitive financial sector capable of promoting high levels of saving and financing for Kenya’s investment needs