IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v4y2020i8p819-823.html
   My bibliography  Save this article

Moderating Effect of Business Size and Age on the Relationship between Financial Literacy and Financial Performance of Craft Micro Enterprises in Kisii County, Kenya

Author

Listed:
  • Dr. Kenyanya Patrick Nyatete, Ph.D.

    (Department of Accounting and Finance, Maseno University, Kenya)

  • Dr. Mule Robert Kisavi, Ph.D.

    (Department of Accounting and Finance, Maseno University, Kenya)

Abstract

Craft micro enterprises contribute up to 20% to employment and 15% to Gross Domestic Product (GDP) in emerging economies through tax revenue and foreign exchange. In spite of funding and training interventions by stakeholders, statistics indicate that financial performance of craft micro enterprises is on a rapid decline, especially in the soapstone-based micro enterprises in Kisii, which poses a risk to both Kenya’s GDP, and the many residents in the area who depend on the industry for survival. Although several studies have attempted to establish the cause of this poor performance, the endogenisation of both business size and age as moderating factors on the relationship between financial literacy and financial performance of the craft micro enterprises in Kisii has received far less attention empirically. The objective of the present study was therefore to investigate the moderating effect of business size and age on the relationship between financial literacy and financial performance of the craft micro enterprises. Using a correlational research design, the study targeted 532 entrepreneurs operating under 23 registered self-help groups. Stratified random sampling was employed to select 228 respondents for the study. Primary data was collected using structured questionnaires. Results showed that business size has a significant moderating effect on the relationship between financial literacy and financial performance of the craft micro enterprises. It is recommended that stakeholders in the craft industry in the soapstone industry should enhance financial literacy trainings to the entrepreneurs and increase financing to grow the enterprises if they seek to improve their financial performance.

Suggested Citation

  • Dr. Kenyanya Patrick Nyatete, Ph.D. & Dr. Mule Robert Kisavi, Ph.D., 2020. "Moderating Effect of Business Size and Age on the Relationship between Financial Literacy and Financial Performance of Craft Micro Enterprises in Kisii County, Kenya," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(8), pages 819-823, August.
    • Handle: RePEc:bcp:journl:v:4:y:2020:i:8:p:819-823
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-4-issue-8/819-823.pdf
    Download Restriction: no
    File URL: https://www.rsisinternational.org/virtual-library/papers/moderating-effect-of-business-size-and-age-on-the-relationship-between-financial-literacy-and-financial-performance-of-craft-micro-enterprises-in-kisii-county-kenya/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jan Mahrt-Smith, 2005. "The Interaction of Capital Structure and Ownership Structure," The Journal of Business, University of Chicago Press, vol. 78(3), pages 787-816, May.
    2. Joaquim J.S. Ramalho & Jacinto Vidigal da Silva, 2009. "A two-part fractional regression model for the financial leverage decisions of micro, small, medium and large firms," Quantitative Finance, Taylor & Francis Journals, vol. 9(5), pages 621-636.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Enrico Santarelli & Hien Thu Tran, 2018. "The interaction of institutional quality and human capital in shaping the dynamics of capital structure in Vietnam," WIDER Working Paper Series wp-2018-66, World Institute for Development Economic Research (UNU-WIDER).
    2. Latouche, Karine & Rouviere, Elodie, 2011. "Brokers vs. Retailers: Evidence from the French Imports Industry of Fresh Produce," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114398, European Association of Agricultural Economists.
    3. Thi Hong Hoang & Călin Gurău & Amine Lahiani & Thuy-Luu Seran, 2018. "Do crises impact capital structure? A study of French micro-enterprises," Small Business Economics, Springer, vol. 50(1), pages 181-199, January.
    4. Jou, Rosemary & Chen, Shi & Tsai, Jeng-Yan, 2017. "Politically connected lending, government capital injection, and bank performance," International Review of Economics & Finance, Elsevier, vol. 47(C), pages 220-232.
    5. Pradhan, Jaya Prakash & Zohair, Mohammad, 2014. "Subnational Export Performance and Determinants: Evidence from Two Indian States," MPRA Paper 60029, University Library of Munich, Germany.
    6. Richard Arhinful & Mehrshad Radmehr, 2023. "The Impact of Financial Leverage on the Financial Performance of the Firms Listed on the Tokyo Stock Exchange," SAGE Open, , vol. 13(4), pages 21582440231, November.
    7. Miglo, Anton, 2022. "Theories of financing for entrepreneurial firms: a review," MPRA Paper 115835, University Library of Munich, Germany.
    8. Hodjo, Manzamasso & Dalton, Timothy & Nakelse, Tebila, 2021. "Cereal Land Allocation Under Weather and Price Uncertainties in West Africa," 2021 Conference, August 17-31, 2021, Virtual 315177, International Association of Agricultural Economists.
    9. Yaldız Hanedar, Elmas & Broccardo, Eleonora & Bazzana, Flavio, 2014. "Collateral requirements of SMEs: The evidence from less-developed countries," Journal of Banking & Finance, Elsevier, vol. 38(C), pages 106-121.
    10. Giannetti, Caterina, 2015. "Debt Concentration of European Firms," LEAP Working Papers 2015/3, Luiss Institute for European Analysis and Policy.
    11. Esmeralda A. Ramalho & Joaquim J. S. Ramalho & José M. R. Murteira, 2014. "A Generalized Goodness-of-functional Form Test for Binary and Fractional Regression Models," Manchester School, University of Manchester, vol. 82(4), pages 488-507, July.
    12. Mateev, Miroslav & Poutziouris, Panikkos & Ivanov, Konstantin, 2013. "On the determinants of SME capital structure in Central and Eastern Europe: A dynamic panel analysis," Research in International Business and Finance, Elsevier, vol. 27(1), pages 28-51.
    13. César Camisón & José Antonio Clemente & Sergio Camisón-Haba, 2022. "Asset tangibility, information asymmetries and intangibles as determinants of family firms leverage," Review of Managerial Science, Springer, vol. 16(7), pages 2047-2082, October.
    14. Enrico Santarelli & Hien Thu Tran, 2018. "The interaction of institutional quality and human capital in shaping the dynamics of capital structure in Vietnam," WIDER Working Paper Series 66, World Institute for Development Economic Research (UNU-WIDER).
    15. Joaquim Ramalho & J. Silva, 2013. "Functional form issues in the regression analysis of financial leverage ratios," Empirical Economics, Springer, vol. 44(2), pages 799-831, April.
    16. Sardo, Filipe & Serrasqueiro, Zélia & Armada, Manuel Rocha, 2024. "Is the zero-leverage policy a persistent phenomenon? Evidence from Portuguese SMEs," Research in International Business and Finance, Elsevier, vol. 69(C).
    17. Andrew V. Stephenson & Amanda Wilsker, 2016. "Consumption Effects of Foreign Remittances in Jamaica," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 22(3), pages 309-320, August.
    18. Mahrt-Smith, Jan, 2006. "Should banks own equity stakes in their borrowers? A contractual solution to hold-up problems," Journal of Banking & Finance, Elsevier, vol. 30(10), pages 2911-2929, October.
    19. Zélia Serrasqueiro & Manuel Armada & Paulo Nunes, 2011. "Pecking Order Theory versus Trade-Off Theory: are service SMEs’ capital structure decisions different?," Service Business, Springer;Pan-Pacific Business Association, vol. 5(4), pages 381-409, December.
    20. Stavros H. Arvanitis & Irakleia S. Tzigkounaki & Theodoros V. Stamatopoulos & Eleftherios I. Thalassinos, 2012. "Dynamic Approach of Capital Structure of European Shipping Companies," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 5(3), pages 33-63, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:4:y:2020:i:8:p:819-823. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.