The Participation Of Commercial Banks In The Development Of Small Enterprise Sector In Kenya

Abstract

This research examines the relationship between commercial banks (CBs) and the small enterprise sector (SES) and identifies constraints' which impede the flow of financial assistance from the commercial banks to the latter in Kenya. The variables that were examined included; requirements for successful loan application, lending levels, degree of risk attached to small enterprise lending, levels of economic impact and stages in business development at which banks become willing to support. For the small enterprises, the study sought to profile the business and its owner and, to examine its financing. The sampling units were drawn from CBs and SES within Nairobi. In data collection, questionnaires, interview and document review was employed. The study found that high interest rates and long processing procedures kept small businesses away from banks. The study established that, on the part of the banks, the entrepreneurs lacked business management skills and did not keep proper records. Moreover, the banks experienced general reproach from the small business owners, based upon conventional beliefs.