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Title: How do small firms in developing countries raise capital? Evidence from a large-scale survey of Kenyan micro and small scale enterprises
Authors: Green, Christopher J.
Kimuyu, Peter
Manos, Ronny
Murinde, Victor
Issue Date: 2002
Abstract: 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.
Description: Economics Research Paper, no. 02-06
URI: https://dspace.lboro.ac.uk/2134/363
Appears in Collections:Working Papers (Economics)

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