INFLUENCE OF CREDIT ACCESSIBILITY ON FINANCIAL PERFORMANCE OF WOMEN-OWNED ENTERPRISES IN ELDORET CITY, KENYA

Abstract: For women-owned businesses in Kenya, obtaining financing remains a major challenge. This limits their ability to grow and improve their financial performance. This study addresses an important knowledge gap about the opportunities and challenges faced by women-owned small and medium enterprises (SMEs) in Eldoret City. It examines the relationship between credit accessibility and financial performance. The specific goals are to assess the impact of credit cost, evaluate the effect of borrowing frequency, investigate the credit supply, and determine how different loan types influence financial performance. The guiding theories for this study are Financial Inclusion Theory, Social Learning Theory (SLT), and Resource-Based View (RBV) Theory. The study used structured questionnaires and interviews with female managers from financial institutions and entrepreneurs, employing a mixed-methods sequential explanatory design. The target population included twenty managers of lending institutions and 1,720 registered women-owned SMEs in Eldoret City. The sample size consisted of 325 respondents, allowing the results to be generalized to the entire population with a 95% confidence level and ±5% margin of error. Stratified random sampling ensured proportional representation of female managers and entrepreneurs. After expert evaluations by research supervisors and a finance/accounting specialist, statistical methods like factor analysis and criterion-related validity testing were applied to ensure the validity of the research tools. A pilot study in Mosoriot, Nandi County, assessed reliability. Cronbach's alpha established consistency, with an acceptable threshold of 0.7 or higher. With an R² value of 0.61, changes in credit cost alone could explain 61% of the variation in financial performance. Results showed a p-value of 0.012, with a coefficient for credit cost (X₁) of 0.35. This indicated that a one-unit increase in credit cost led to a 0.35-unit statistically significant decline in the financial performance of women-owned businesses. Increasing interest rates or transaction costs negatively affected financial success. Financial performance positively and significantly benefited from frequent borrowing, indicated by a coefficient for borrowing frequency (X₂) of 0.28 and a p-value of 0.021. This finding suggests that financial performance rose by 0.28 units for each unit increase in borrowing frequency, likely due to better liquidity or reinvestment opportunities. Credit accessibility (X₃) had a p-value of 0.004, with the largest positive coefficient of 0.41. This showed that improved access to credit significantly boosted financial performance. Lastly, the loan types available (X₄) had a p-value of 0.037, with a coefficient of 0.22. This means that for every unit increase in the variety of loan products accessed, financial performance improved by 0.22 units. The study highlighted the importance of flexible and diverse financial products that meet the needs of female entrepreneurs to promote business growth and sustainability. Regression analysis indicated that every predictor variable significantly impacted the financial performance of women-owned businesses in Eldoret City, with statistical significance (p < 0.05). To ensure affordability for women-owned businesses, the researcher suggested examining and adjusting loan pricing systems. Financial institutions could lower collateral requirements, simplify loan application processes, and extend services to underserved areas to enhance credit availability. The study also encouraged financial institutions to diversify their loan portfolios for women entrepreneurs, as access to various loan types (such as asset-based, working capital, and trade credit) improves financial performance. Providing tailored loan solutions that address specific business needs can help optimize capital use. These measures aim to enhance the sustainability and financial performance of women-owned businesses in Nakuru City. Keywords: Borrowing Frequency, Credit Accessibility, Credit Cost, Credit Supply, Financial Performance, Loan Type, Women-Owned Enterprises. Title: INFLUENCE OF CREDIT ACCESSIBILITY ON FINANCIAL PERFORMANCE OF WOMEN-OWNED ENTERPRISES IN ELDORET CITY, KENYA Author: John Nderitu Wachira, Irene Cherono International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online) Vol. 13, Issue 1, April 2025 - September 2025 Page No: 531-548 Research Publish Journals Website: www.researchpublish.com Published Date: 25-September-2025 DOI: https://doi.org/10.5281/zenodo.17200932 Paper Download Link (Source) https://www.researchpublish.com/papers/influence-of-credit-accessibility-on-financial-performance-of-women-owned-enterprises-in-eldoret-city-kenya