article · International Journal of Finance and Accounting
Micro, small and medium enterprises play an essential role in economic growth and job creation in Kenya, yet those operating in rural settings frequently encounter poor financial outcomes because of restricted access to formal banking. A study of 378 enterprise owners and managers in Nandi County assessed how obtaining financial services influences operational outcomes. The investigation considered tools such as bank accounts, mobile money, agency banking, and credit access. The evidence confirms a positive and statistically significant link between these services and enterprise success. Businesses with stronger access demonstrated superior profitability, higher revenue growth, better liquidity, and improved returns on investment. Overall, access to financial mechanisms served as a dependable predictor of financial sustainability.
Rural micro, small and medium enterprises frequently struggle to stay afloat when excluded from mainstream banking. Demonstrating that accessible digital finance, agency networks, and simplified credit directly bolster enterprise revenue and liquidity provides a clear rationale for financial institutions and policymakers to tailor infrastructure and services to underserved communities.
The findings can inform the design of inclusive financial tools, mobile banking platforms, and agency banking networks deployed by commercial banks, microfinance institutions, and fintech companies targeting rural enterprises. Because the research assesses operational businesses and established financial mechanisms, the insights are applied and directly actionable for service providers seeking to streamline lending and expand rural digital access.
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Purpose: Micro, Small and Medium Enterprises (MSMEs) are critical to employment creation, income generation, and economic growth in Kenya. However, many MSMEs continue to experience poor financial performance due to limited access to formal financial services, particularly in rural areas. This study examined the effect of access to financial services on the financial performance of MSMEs in Nandi County, Kenya. Methodology: Guided by Financial Intermediation Theory, the study adopted an explanatory research design. A sample of 378 MSME owners and managers was selected from a target population of 6,820 registered enterprises using a multistage sampling technique. Primary data were collected through a structured questionnaire and analyzed using descriptive statistics, Pearson correlation, and multiple regression analysis. Findings: The findings revealed a positive and statistically significant relationship between access to financial services and financial performance. MSMEs with better access to bank accounts, mobile banking, agency banking, and credit facilities reported higher profitability, revenue growth, liquidity, and return on investment. Regression analysis further established that access to financial services was a significant predictor of financial performance, leading to the rejection of the null hypothesis. Unique Contribution to Theory, Practice and Policy: Improving access to affordable and reliable financial services enhances the financial sustainability and growth of MSMEs. It recommends strengthening financial infrastructure, expanding digital financial services, simplifying lending procedures, and promoting inclusive financial products to improve MSME performance, particularly in rural Kenya.
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DOI: 10.47604/ijfa.3921
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