Relationship Between Financial Risk Management and Performance of Small and Micro Enterprise in Moiben Constituency Uasin - Gishu County.
Journal Title: Africa International Journal of Multidisciplinary Research - Year 2018, Vol 2, Issue 3
Abstract
Financial literacy provides knowledge and understanding of financial concepts and the skills, motivation and confidence to apply such knowledge and understanding in order to make effective decisions across a range of financial context and to improve the financial well of SMEs. Research shows that 65.1% of the SMEs in Kenya fail within their first year of operation. This study determined the relationship between financial risk management and the performance of micro and small enterprises in Moiben constituency, Uasin Gishu County, Kenya. The study adopted a cross-sectional survey research design. A total of 1923 registered micro and small enterprises in Moiben Constituency comprised the study population. A sample of 331 micro and small enterprises was involved in the study. Two stage sampling technique; purposive sampling and simple random sampling was used to select micro and small enterprises to be used in the study. A pilot study was conducted so as to test the validity and reliability of the research questionnaire. Validity of the research instrument was achieved by using of content validity test while reliability was tested using Cronbach’s alpha coefficient. Self-administered questionnaires and a secondary data sheet were used to collect data. Data was analyzed using descriptive and inferential statistics and presented by use of tables, charts and graphs. The result of the study indicates that financial risk management affects the firm’s performance of micro and small enterprises in Moiben Constituency. Performance of small and micro enterprises was found to be significantly affected by financial risk management (t = 8.327; p = 0.041). The study therefore recommends that stakeholders involved should therefore focus on developing programs to educate SMEs on how to assess, monitor and reduce risk of a given business portfolio. The study findings informs all the stakeholders in charge of the SMEs sector as it proves that financial literacy affects the financial performance of the micro and small enterprises.
Authors and Affiliations
Noah K. Kiprop, Kimani E. Maina
Keywords
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