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Research Paper | Finance | Kenya | Volume 7 Issue 12, December 2018 | Popularity: 6.9 / 10

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Credit Processing Period and Financial Performance: Empirical Evidence from Agribusiness Small and Micro Enterprises in Nyeri Central Sub County Kenya

Caroline Wanja Githinji, Dr. David Kiragu, Dr. Richard M. Kiai

Abstract: Agriculture is the mainstay of Kenyan Economy. One of the key players in the Sector is Agribusiness small and micro enterprises (SMEs). These SMEs play a critical role in provision of employment in emerging economies like Kenya. Access to finance is critical to growth as well as development of small and micro enterprises (SMEs). Most of the SMEs rely on commercial banks for financing of their enterprises. Inadequate access to finance could limit growth as well as development of these institutions. This study aimed at investigating the effect of credit processing period on financial performance of agribusiness small and micro enterprises in Nyeri Central Sub County. The study adopted credit rationing theory. The target population of this study was 950 licensed Agribusiness SMEs in Nyeri Central. A sample size of 274 licensed SMEs operating in the Nyeri Central Sub County was chosen by the use of the Krejcie and Morgan's criterion. A pilot study was done and a Cronbach alpha coefficient of 0.7 was used to evaluate the reliability of the semi-structured questionnaires. A response rate of 86.5% was achieved. . Regression assumptions of linearity, independence and normality were done. Results were interpreted using 5% level of significance. Bivariate Linear regression analysis results indicated that there was a negative and statistically significant linear relationship between credit processing period and financial performance of Agribusiness SMEs. . The study recommends that the period it takes to process credit should be reduced in order to enhance performance of Agribusiness SMEs. In addition, Agribusiness SMEs should maintain all relevant financial records and books of accounts required and prepare final accounts to fast track credit processing. The overall effect of this might be enhanced financial performance.

Keywords: Credit Processing Period, Financial Performance, Agribusiness Small and Micro Enterprises

Edition: Volume 7 Issue 12, December 2018

Pages: 1265 - 1270

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