Credit and Employment Growth among Small Enterprises in Kenya

Eliud Dismas Moyi

doi:doi:10.11648/j.ijber.20130203.14

| Peer-Reviewed

Credit and Employment Growth among Small Enterprises in Kenya

Eliud Dismas Moyi

Published in International Journal of Business and Economics Research (Volume 2, Issue 3)

Published: 20 June 2013

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

Abstract

Policy makers in Kenya expect micro and small enterprises to provide the bulk of new jobs created in the economy yet these enterprises face significant credit constraints. This study applied regression analysis to establish the link between the credit constraint and employment growth of small enterprises in Kenya. The results failed to confirm any important role for the credit constraint in limiting small firm employment growth. However, the credit constraint variable posted significant results when interacted with other variables such as access to workspace, access to technology and formality status of the enterprise. This was interpreted to mean that the marginal effect of the credit constraint on firm growth mainly depended on access to workspace, access to technology and formality status. This leads to the conclusion that the current emphasis on credit alone and the minimalist paradigm need to be re-evaluated.

Published in	International Journal of Business and Economics Research (Volume 2, Issue 3)
DOI	10.11648/j.ijber.20130203.14
Page(s)	69-76
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2013. Published by Science Publishing Group

Keywords

Entrepreneurship, Credit, Economic Growth, Developing Economies

References

[1]	Atieno, R (2001), Formal and Informal Institutions Lending Policies and Access to Credit by Small-scale Enterprises in Kenya: An Empirical Assessment", African Economic Research Consortium, Research Paper 111, Nairobi.
[2]	Aziz, J. and C. Duenwald (2002) "Growth-Financial Intermediation Nexus in China", IMF Working Paper WP/02/194, November.
[3]	Belongia M.T and Gilbert R.A (1990) "The Effects of Federal Credit Programs on Farm Output", American Journal of Agricultural Economics, Vol. 72, No. 3, pp769-773.
[4]	CBS, ICEG and K-REP (1999) Baseline Survey of Micro and Small Enterprises. Central Bureau of Statistics (CBS), International Centre for Economic Growth (ICEG) and K-REP Holdings (K-REP). Nairobi. Kenya.
[5]	Daniels, L. Mead D.C and Musinga M (1995) "Employment and Income in Kenya: Results of a 1995 Survey", GEMINI Technical Report No 92, US.
[6]	Darrough. M.N. and N.M. Stoughton (1986) "Moral Hazard and Adverse Selection: The Question of Financial Structure", The Journal of Finance Vol. 41, No. 2, pp 501-513.
[7]	Dirks, Arthur. L (1998) "Higher Education in Marketing Theory", published on-line by author (http://webhost.bridgew.edu/adirks/ald/papers/mktheor.htm). Bridgewater, MA. accessed on 13th September 2005.
[8]	Ditcher T. (2007) "A Second Look at Micro-finance: The Sequence of Growth and Credit in Economic History", Development Policy Briefing Paper No 1, Cato Institute, Washington.
[9]	Evans. D. S (1987) "The Relationship Between Firm Growth, Size, and Age: Estimates for 100 Manufacturing Industries", The Journal of Industrial Economics, Vol. 35, Issue 4 pp 567 –581.
[10]	Hermes, N. and R. Lensink (2001) "Foreign Direct Investment, Financial Development and Economic Growth", University of Groningen, The Netherlands.
[11]	Joshi, M.G (2005) "Access to Credit by Hawkers: What is missing? Theory and Evidence from India", PhD Dissertation, Ohio State University.
[12]	Kimuyu, P., and Omiti, J., (2000). Institutional Impediments to Access to Credit by Micro Small-scale Enterprises in Kenya. Discussion Paper No. 026. IPAR. Nairobi.
[13]	Kiraka, R.; Kobia. M and A.M. Katwalo (2013). Micro, Small and Medium Enterprise Growth and Innovation in Kenya: A Case Study on the Women Enterprise Fund. ICBE-RF Research Report No 47/13, Dakar
[14]	GOK (2007) Kenya Integrated Budget Household Survey 2005/6: Vol. 1 – Basic Report, Kenya National Bureau of Statistics, Government of Kenya, Nairobi.
[15]	GOK (2008) First Medium Term Plan 2008-2012; Kenya Vision 2030, Office of the Prime Minister, Ministry of State Planning, National Development and Vision 2030, Government of Kenya, Nairobi.
[16]	Krasniqi. B.A. (2007) "Barriers to Entrepreneurship and SME Growth in Transition: The Case of Kosova", Journal of Developmental Entrepreneurship, Vol. 12, No. 1, pp 71-94.
[17]	Levine, R. (2004) Finance and Growth: Theory and Evidence, Working Paper 10766, National Bureau of Economic Research (NBER), USA.
[18]	Liedholm C, McPherson M and E Chuta (1994) Small Enterprise Employment Growth in Rural Africa", America Journal of Agricultural Economics, Vol 76, No 5 pp 1177 – 1182.
[19]	Liedholm, Carl (2002). "Small Firm Dynamics: Evidence from Africa and Latin America", Small Business Economics, 18: 227-242.
[20]	Mairura. C.J., Namusonge. G.S. and K. Karanja (2013) "The Role of Financial Intermediation in the Growth of Small and Medium Manufacturing Enterprises in Kenya: A survey of Small and Medium Enterprises in Nairobi". International Journal of Advanced Research in Management and social Sciences. Vol 2 No 5. Pp 111-126
[21]	Memba S.F., Gakure W.R. and K. Karanja (2012) "Venture Capital: Its Impact on Growth of Small and Medium Enterprises in Kenya", International Journal of Business and Social Science, Vol. 3 No 6; March
[22]	Mbugua T, Ronge E, and L. Ndirangu (2004) "Aid Effectiveness and Donor Coordination in the MSE Sector in Kenya", Mimeograph, KIPPRA, Nairobi.
[23]	McCormick D and M.N. Kinyanjui (1997) "Growth and Barriers to growth Among Nairobi’s Small and Medium-Sized Garment Producers", World Development, Vol. 25, No 7, pp. 1095-1110.
[24]	Mishkin. F.S (1999) "Global Financial Instability: Framework, Events, Issues", The Journal of Economic Perspectives, Vol. 13, No. 4, pp 3-20.
[25]	Mishra. V. (2005) "Size, Age and Firm Growth: The Computer Industry in India", Review of Development and Change, Vol. 10 (2) pp.167-184.
[26]	Moyi E and P. Njiraini (2005a) "Towards Technology Models for MSEs in Kenya: Common Principles and Best Practices", Discussion Paper No. 51, Kenya Institute of Public Policy Research and Analysis - KIPPRA, Nairobi.
[27]	Moyi E and P. Njiraini (2005b) "Misallocation of Workspaces for MSEs in Kenya: Some Lessons and Models", Discussion Paper No. 53, Kenya Institute of Public Policy Research and Analysis - KIPPRA, Nairobi.
[28]	Mwangi. I.W. and K.L. Wanjau (2013) "The Role of SACCO in Growth of Youth Entrepreneurship in Kenya: A Case of Nairobi County", Greener Journal of Business and management Studies Vol. 3(3) pp 113-118, April
[29]	Navajas S; Schreiner. M; Meyer R.L.; Gonzalez-Vega . C; and J. Rodriguez-Meza (2000) "Micro-Credit and the Poorest of the Poor: Theory and Evidence from Bolivia", World Development Vol. 28, No 2, pp 333-346.
[30]	Nkurunziza J.D. (2005) "The Effect of Credit on Growth and Convergence of Firms in Kenyan Manufacturing", Working Paper No 1, Center for Study of African Economies, Oxford University.
[31]	Obwori. E., Iravo. M., Munene. C. and S. Kaburi (2012) "The Effect of Funding Constraints on the Growth of Small Scale Enterprises in Soapstone Industry in Kenya". International Journal of Arts and Commerce. Vol. 1 No 6. November
[32]	Onyuma. S.O and Ouma A. S. (2005), "Myths of microfinance as a panacea for poverty reduction and women empowerment". Savings and Development Quarterly Review No. 2, Vol. XXIX, pp. 199-222.
[33]	Ouma, A. S. (2002) "Financial Sector Dualism: Determining Attributes for Small and Micro Enterprises in Urban Kenya" PhD Dissertation, Shaker Verlag.
[34]	Ouma, A. S. and R. Atieno (2001), "Financial dualism and financial sector development in low income countries." Savings and Development Quarterly Review No.4, Vol. XXV, pp. 413-438.
[35]	Ouma, A. S. and H. J. Rösner (2003), "Savings institutions that count for small and micro enterprises: The case of urban Kenya." African Review of Money Finance and Banking, Issue 2003.
[36]	Roth, J (1997) "The Limits of Micro-Credit as a Rural Development Intervention", MA Thesis (unpublished), University of Manchester, UK.
[37]	Simeyo. O., Lumumba, M., Nyabwanga. R.N., Ojera P. and A.J. Odondo (2011) "Effect of Provision of Micro Finance on the Performance of Microenterprises: A Study of Youth Microenterprises under Kenya Rural Enterprise Program (K-REP), Kisii County, Kenya", African Journal of Business Management, Vol. 5(20), pp 8290 - 8300
[38]	Simwa. S. O. and M. Sakwa (2013) "Effect of loans on the Profit Margins of Women Managed Second Hand Merchandise Enterprises at Kibuye Market, Kisumu County, Kenya", Interdisciplinary journal of Contemporary Research In Business. Vol. 4 No 12. April
[39]	Sleuwaegen L and M. Goedhuys (1998) "Determinants of Entrepreneurship and Growth of Entrepreneurial Firms in Cote d’Ivoire", RPED Paper No 92, World Bank.

Cite This Article

Plain Text BibTeX RIS

APA Style

Eliud Dismas Moyi. (2013). Credit and Employment Growth among Small Enterprises in Kenya. International Journal of Business and Economics Research, 2(3), 69-76. https://doi.org/10.11648/j.ijber.20130203.14

Copy | Download

ACS Style

Eliud Dismas Moyi. Credit and Employment Growth among Small Enterprises in Kenya. Int. J. Bus. Econ. Res. 2013, 2(3), 69-76. doi: 10.11648/j.ijber.20130203.14

Copy | Download

AMA Style

Eliud Dismas Moyi. Credit and Employment Growth among Small Enterprises in Kenya. Int J Bus Econ Res. 2013;2(3):69-76. doi: 10.11648/j.ijber.20130203.14

Copy | Download

@article{10.11648/j.ijber.20130203.14,
  author = {Eliud Dismas Moyi},
  title = {Credit and Employment Growth among Small Enterprises in Kenya},
  journal = {International Journal of Business and Economics Research},
  volume = {2},
  number = {3},
  pages = {69-76},
  doi = {10.11648/j.ijber.20130203.14},
  url = {https://doi.org/10.11648/j.ijber.20130203.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20130203.14},
  abstract = {Policy makers in Kenya expect micro and small enterprises to provide the bulk of new jobs created in the economy yet these enterprises face significant credit constraints. This study applied regression analysis to establish the link between the credit constraint and employment growth of small enterprises in Kenya. The results failed to confirm any important role for the credit constraint in limiting small firm employment growth. However, the credit constraint variable posted significant results when interacted with other variables such as access to workspace, access to technology and formality status of the enterprise. This was interpreted to mean that the marginal effect of the credit constraint on firm growth mainly depended on access to workspace, access to technology and formality status. This leads to the conclusion that the current emphasis on credit alone and the minimalist paradigm need to be re-evaluated.},
 year = {2013}
}

Copy | Download

TY  - JOUR
T1  - Credit and Employment Growth among Small Enterprises in Kenya
AU  - Eliud Dismas Moyi
Y1  - 2013/06/20
PY  - 2013
N1  - https://doi.org/10.11648/j.ijber.20130203.14
DO  - 10.11648/j.ijber.20130203.14
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 69
EP  - 76
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20130203.14
AB  - Policy makers in Kenya expect micro and small enterprises to provide the bulk of new jobs created in the economy yet these enterprises face significant credit constraints. This study applied regression analysis to establish the link between the credit constraint and employment growth of small enterprises in Kenya. The results failed to confirm any important role for the credit constraint in limiting small firm employment growth. However, the credit constraint variable posted significant results when interacted with other variables such as access to workspace, access to technology and formality status of the enterprise. This was interpreted to mean that the marginal effect of the credit constraint on firm growth mainly depended on access to workspace, access to technology and formality status. This leads to the conclusion that the current emphasis on credit alone and the minimalist paradigm need to be re-evaluated.
VL  - 2
IS  - 3
ER  -

Copy | Download

Author Information

Eliud Dismas Moyi

Macroeconomics Division, Kenya Institute for Public Policy Research and Analysis (KIPPRA), Nairobi, Kenya

Download PDF

Sections

Plain Text BibTeX RIS

APA Style

Eliud Dismas Moyi. (2013). Credit and Employment Growth among Small Enterprises in Kenya. International Journal of Business and Economics Research, 2(3), 69-76. https://doi.org/10.11648/j.ijber.20130203.14

Copy | Download

ACS Style

Eliud Dismas Moyi. Credit and Employment Growth among Small Enterprises in Kenya. Int. J. Bus. Econ. Res. 2013, 2(3), 69-76. doi: 10.11648/j.ijber.20130203.14

Copy | Download

AMA Style

Eliud Dismas Moyi. Credit and Employment Growth among Small Enterprises in Kenya. Int J Bus Econ Res. 2013;2(3):69-76. doi: 10.11648/j.ijber.20130203.14

Copy | Download

@article{10.11648/j.ijber.20130203.14,
  author = {Eliud Dismas Moyi},
  title = {Credit and Employment Growth among Small Enterprises in Kenya},
  journal = {International Journal of Business and Economics Research},
  volume = {2},
  number = {3},
  pages = {69-76},
  doi = {10.11648/j.ijber.20130203.14},
  url = {https://doi.org/10.11648/j.ijber.20130203.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20130203.14},
  abstract = {Policy makers in Kenya expect micro and small enterprises to provide the bulk of new jobs created in the economy yet these enterprises face significant credit constraints. This study applied regression analysis to establish the link between the credit constraint and employment growth of small enterprises in Kenya. The results failed to confirm any important role for the credit constraint in limiting small firm employment growth. However, the credit constraint variable posted significant results when interacted with other variables such as access to workspace, access to technology and formality status of the enterprise. This was interpreted to mean that the marginal effect of the credit constraint on firm growth mainly depended on access to workspace, access to technology and formality status. This leads to the conclusion that the current emphasis on credit alone and the minimalist paradigm need to be re-evaluated.},
 year = {2013}
}

Copy | Download

TY  - JOUR
T1  - Credit and Employment Growth among Small Enterprises in Kenya
AU  - Eliud Dismas Moyi
Y1  - 2013/06/20
PY  - 2013
N1  - https://doi.org/10.11648/j.ijber.20130203.14
DO  - 10.11648/j.ijber.20130203.14
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 69
EP  - 76
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20130203.14
AB  - Policy makers in Kenya expect micro and small enterprises to provide the bulk of new jobs created in the economy yet these enterprises face significant credit constraints. This study applied regression analysis to establish the link between the credit constraint and employment growth of small enterprises in Kenya. The results failed to confirm any important role for the credit constraint in limiting small firm employment growth. However, the credit constraint variable posted significant results when interacted with other variables such as access to workspace, access to technology and formality status of the enterprise. This was interpreted to mean that the marginal effect of the credit constraint on firm growth mainly depended on access to workspace, access to technology and formality status. This leads to the conclusion that the current emphasis on credit alone and the minimalist paradigm need to be re-evaluated.
VL  - 2
IS  - 3
ER  -

Copy | Download