Loughborough University
Browse
erp02-6.pdf (811.84 kB)

How do small firms in developing countries raise capital? Evidence from a large-scale survey of Kenyan micro and small scale enterprises

Download (811.84 kB)
preprint
posted on 2005-08-12, 14:45 authored by Christopher Green, Peter Kimuyu, Ronny Manos, Victor Murinde
This paper utilizes a unique comprehensive dataset, drawn from the 1999 baseline survey of some 2000 micro and small-scale enterprises (MSEs) in Kenya. We analyse the financing behaviour of these enterprises within the framework of a heterodox model of debt-equity and gearing decisions. We also study determinants of the success rate of loan applications. Our results emphasize three major findings. First, MSEs in Kenya obtain debt from a wide variety of sources. Second, debt-equity and gearing decisions by MSEs and their success rates in loan applications can all be understood by relatively simple models which include a mixture of conventional and heterodox variables. Third, and in particular, measures of the tangibility of the owner's assets, and the owner's education and training have a significant positive impact on the probability of borrowing and of the gearing level. These findings have important policy implications for policy-makers and entrepreneurs of MSEs in Kenya.

History

School

  • Business and Economics

Department

  • Economics

Pages

885913 bytes

Publication date

2002

Notes

Economics Research Paper, no. 02-06

Language

  • en

Usage metrics

    Loughborough Publications

    Exports

    RefWorks
    BibTeX
    Ref. manager
    Endnote
    DataCite
    NLM
    DC