EFFECTS OF MICROFINANCE LENDING ON WORKING CAPITAL MANAGEMENT OF MICRO AND SMALL ENTERPRISES IN NAROK TOWN KENYA.

Abstract

This study sought to establish the effects of MFIs lending on working capital management of micro and small businesses in Narok Town. The objectives of the study were to establish the effects of Microfinance lending on cash management, inventory management, receivables management and payable management of MSEs. The study used descriptive survey design and the target population comprised of 240 MSEs. Purposive sampling technique was used to select a sample of 71 MSEs from the population. Primary data were gathered for the study using face to face interviews with an aid of structured questionnaire. Reliability coefficient 0.7 and above was accepted. Descriptive statistics which includes percentages, frequencies, means, standard deviation and inferential statistics namely; t-test, Pearson product moment correlation and regressions were used to analyze the data. Test of significance was tested at α=0.1. The Statistical Package for Social Science (SPSS) aided the data analysis. The study established that MFIs lending (cost of lending, loan period and loan size) positively affect working capital management (cash management, inventory management, receivables management and payable management) of MSEs in Narok Town.