The role of financial intermediaries in administering youth fund: A case study of equity bank in Thika sub county

Abstract

The quantity of youth fund is not the impediment to high potential of its effectiveness on job creation to the youth. The issue is the information asymmetry that makes the Financial Intermediaries (FI) apply strategies to the market that signal on pr ime loaners like collateral which many youth do not own, hence the youth perceives as difficult requirements. The study sort to determine the role of financial intermediaries in the management of the Youth Enterprise Development Fund (YEDF). This study has brought out the role in enhancing outreach and also minimizing depletion of the fund by reducing loss through default. The study was carried out in Kiambu County , Thika Sub Count y, where stratified random sampling of 59 groups under the (YEDF) was selecte d. Data collection involve d both secondary data from the bank and primary data through questionnaire administered to the group. Data analysis involved multiple regression analysis . The study found that the youth groups had a high loan portfolio and had exi sted for an average of 60 mo nths. The youth groups were composed of both youths and older persons with some lacking youths though they received youth funds. Hence a need to correct this by a plan to graduate all the youths above 35 years of age out of acce ss to youth fund to bank loans with a moderate interest above the youth fund interest but below the market for some duration to minimize shock. The youth groups also had balanced gender mix. However, some were composed of entirely either gender. The bank h as an enhanced stability of the groups by creating a strong bond and collective individual responsibility by not only funding individual businesses but joint group projects like purchase of group land parcels and ensuring group attendance discipline. Youth fund empowered many youths within the groups sampled. The study established good linearity between cash cover/savings , average loan size and loan portfolio in arrears , and loan portfolio of group