| dc.description.abstract | Vision 2030 has emphasized the importance of SMEs in Kenya. Small and Medium Enterprises
are noted as a crucial catalyst for achieving vision 2030. The research was done on the effects of
Microfinance institutions` on financial performance of small and medium enterprises in
Machakos town, where the general objective of the research was to determine whether there was
any significant effect of Microfinance institutions` products on the financial performance of
small and medium enterprises in Machakos town. Descriptive research design was employed
since the researcher collected information through descriptions and this design is also useful for
identifying variables and hypothetical construction. Stratified random sampling technique was
used, and the sample size was determined as 372, at 95% confidence interval. Primary data was
collected through questionnaires issued to the owners and managers of SMEs, while secondary
data was collected by use of secondary data collection sheet. Both descriptive and inferential
statistics were used to analyze data, while correlation and regression were also used to establish
the strength of the relationship between microfinance products and financial performance of
small and medium enterprises. Statistical Packages for Social Sciences (SPSS) was used by the
researcher to facilitate the analysis and interpretation of data, and the results obtained was
presented by the use of bar graphs, pie charts, and table for easy interpretation. The results
showed that, the MFIs` products offered (micro savings, micro credit and training) had a strong
positive correlation on the financial performance of the SMEs, while there was a weak positive
correlation between micro insurance and financial performance of the SMEs. The regression
analysis indicated that; micro savings, micro credit and micro insurance had significance effect
on the financial performance of SMEs, while training had no significance effect on the financial
performance of the SMEs. The study recommended that MFIs have a great responsibility of
ensuring the proper use of credit which is an important facility in financial performance of
businesses. To achieve this, credits should be SMEs-oriented and not product- oriented. Proper
and extensive monitoring activities should be provided to SMEs who are granted the micro credit
product. MFIs can research into very profitable business lines and offer credit to SMEs who have
the capacity to exploit such business lines, micro insurance is paramount to SMEs in cushioning
them in the event of unfavorable occurrence, and should be enhanced properly to the SMEs, and
that business and financial training should be provided by MFIs on a regular basis and most
cases should be tailored toward the training needs of the SMEs. | en_US |
