Research Papers

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Author: search.filters.author.Dr. Alphonce Odondo

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    Effects of Debt Financing on Financial Performance of Small and Medium-Sized Enterprises in Homa Bay Town, Kenya
    (THE INTERNATIONAL JOURNAL OF BUSINESS & MANAGEMENT, 2021-12) Kelvin Otieno Okelo; Dr. Micah Nyamita; Dr. Alphonce Odondo
    The SMEs in Kenya account for 98% of businesses and create about 30% of jobs annually. Many SMEs face challenges of a stable financing cycle, and are unable to adjust to sales cycles that are available in the market, hence affecting their financial performance. Although SMEs have numerous accesses to debt financing in Kenya, they still struggle to remaininto operation due to poor financial performance. Further, studies also have emphasized that despite the fact that debt financing is readily available in Kenya, most SMEs cannot access them due to lack of collateral and ignorance of the various financing options available in the country. Therefore, this study sought to establish the effect of debt financing onfinancial performance of small and medium-sized enterprises (SMEs) in Homa Bay Town, Kenya. Specifically, the study sought to identify the effect of long term financing on financial performance of SMEs in Homa Bay Town, identify the effect of trade credit on financial performance of SMEs and examine theeffect of short term financing on performance of SMEs in Homa Bay Town. The target population was made up of 825 retail SMEs in Homa Bay Town. The study adopted Yamane’s formula to derive the sample size of 296 SMEs. Primary data was obtained from the sampled SMEs using structured and semi structured questionnaires. The study concluded that there is a great effect of debt financing on the financial performance of SMEs in Homa Bay Town, with long term and short term financing having the highest effect and trade credit ranked lowest in terms of statistical significance.
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    RELATIONSHIP BETWEEN FINANCIAL LITERACY AND BORROWING BEHAVIOUR OF SMALL-SCALE BUSINESS OWNERS IN HOMA BAY TOWN, KENYA
    (EPRA JOURNALS, 2017-03-03) Dickence Aketcha; Dr. Alphonce Odondo
    Small-scale businesses play an important role in the global economy with over 60% of the population depending on them for employment. About 30% of the population in Kenya depends on Small-scale businesses for their livelihoods. However, up to 70% of the businesses are collapsing under the burden of unserviced loans. In Homa Bay town, 60% of the non-performing loans portfolio among commercial banks is from small-scale businesses, suggesting poor borrowing behaviour. While prior studies indicate that financial literacy generally influences borrowing behaviour, there is no clear link between financial literacy and borrowing behavior of small-scale business owners, particularly in Homa-bay town. On this basis, the study sought to establish the relationship between financial literacy and borrowing behavior among the small business owners. It was guided by correlational research design and anchored on the theory of Reasoned Action and the theory of Planned Behaviour. Out of 1220 business, a sample of 301 small scale business owners was taken. Stratified random sampling technique was used to draw individual respondents. Primary data were collected using questionnaires while secondary data were from the business records. Reliability coefficient for the questionnaires was 0.815 and content validity index was 0.723. Peason correlation and multiple regression were used to establish the relationship. The study revealed that 65% and 49.8% changes in the borrowing behaviour were associated with the business owners’ knowledge of key money concepts and knowledge on the financial institutions respectively. The estimated model could explain up to 59.6% variations in the borrowing behaviour of the business owners. The study concludes that borrowing behavior of the small-scale business owner is significantly related to the owner’s financial literacy. It is recommended that the small-scale business owners be educated more on financial matters, particularly the key money concepts and the existing financial institutions. Findings from the study may benefit both the borrowers and lenders in financial planning. Researchers may also use the findings as a source of literature for further research in the field of study.
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    RELATIONSHIP BETWEEN FINANCIAL LITERACY AND BORROWING BEHAVIOUROF SMALL-SCALE BUSINESS OWNERS INHOMA BAY TOWN, KENYA
    (EPRA International Journal of Economic and Business Review, 2017-03-03) Dickence Aketcha; Dr. Alphonce Odondo
    S mall-scale businesses play an important role in the global economy with over 60% of the population depending on them for employment. About 30% of the population in Kenya depends on Small-scale businesses for their livelihoods. However, up to 70% of the businesses are collapsing under the burden of unserviced loans. In Homa Bay town, 60% of the non-performing loans portfolio among commercial banks is from small-scale businesses, suggesting poor borrowing behaviour. While prior studies indicate that financial literacy generally influences borrowing behaviour, there is no clear link between financial literacy and borrowing behavior of small-scale business owners, particularly in Homa-bay town. On this basis, the study sought to establish the relationship between financial literacy and borrowing behavior among the small business owners. It was guided by correlational research design and anchored on the theory of Reasoned Action and the theory of Planned Behaviour. Out of 1220 business, a sample of 301 small scale business owners was taken. Stratified random sampling technique was used to draw individual respondents. Primary data were collected using questionnaires while secondary data were from the business records. Reliability coefficient for the questionnaires was 0.815 and content validity index was 0.723. Peason correlation and multiple regression were used to establish the relationship. The study revealed that 65% and 49.8% changes in the borrowing behaviour were associated with the business owners’ knowledge of key money concepts and knowledge on the financial institutions respectively. The estimated model could explain up to 59.6% variations in the borrowing behaviour of the business owners. The study concludes that borrowing behavior of the small-scale business owner is significantly related to the owner’s financial literacy. It is recommended that the small-scale business owners be educated more on financial matters, particularly the key money concepts and the existing financial institutions. Findings from the study may benefit both the borrowers and lenders in financial planning. Researchers may also use the findings as a source of literature for further research in the field of study.