IMPACT OF MICROFINANCE SERVICES ON THE FINANCIAL PERFOMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES IN KAKAMEGA COUNTY.

This research seeks to find out the impact of microfinance services on financial performance of
SMEs in Kakamega County, Kenya. Governments, donor agencies, and private investors are
funding an increasing number of microfinance programs in low-income countries. The findings
of this research would enable all these financiers to know if their efforts are creating a
meaningful impact on SMEs. A sample survey research design is employed in this study. This
enabled the researcher to give adequate attention to each return received from the respondents in
order to enhance accuracy. All the microfinance institutions (MFIs) operating within the county
are involved in the study with a proportionate sample of SMEs being obtained from each MFI on
the basis of total SMEs population served. A likert scale questionnaire is used to map the
responses obtained on the impact of microfinance services. Descriptive and inferential statistics
are used for the purpose of data analysis. Mean is used to measure the average satisfaction level
and standard deviation used to measure the extent of diversity of respondents’ opinions
(agreement level).Regression model is used to measure the general relationship between
microfinance services and financial performance. The research finds out that microfinance
services has had a positive impact on the various dimensions that constitute financial
performance. The research therefore concludes that microfinance services have improved the
financial performance of SMEs in Kakamega County, Kenya.

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