Effect Of Financial Habits On Financial Performance Of Women Owned Micro, Small And Medium Enterprises In Meru, Kenya

Abstract

With the decreased rate of collar jobs, and with the government aim to achieve the Big four Agenda and vision 2030, self-employment is very vital for the economic growth and this is possible through MSMEs whereby women are the majority being considered as integral for economic growth. Despite a lot of energy being channeled by both government and non governmental bodies in building women entrepreneurs research shows they been facing survival and success challenges. Several studies have been done in past to come up with solution for survival and success of women owned MSMEs financial growth yet a large number of closer up and stagnation been recorded to date meaning major solution not yet found, therefore been necessary to study further. This research focused on the effect of financial habits on financial performance of MSMEs, these financial habits include: saving habit, credit habit, and investment habit. The key theories in this study were Entrepreneurship theory, prospect theory, Financial Literacy Theory and Traits theory. The study focused on registered MSMEs women in Meru town by June 2019, and used questionnaire to collect the data, both open and closed questions. Pilot test was done; reliability and validity of research instruments was done. Linear regression model was used to analyses the data and to estimate the effects of financial habit on women owned MSMEs. Analyzed data was presented using tables, and figures. The study established that saving habit has positive and significant effect on financial performance of women owned enterprises, Credit habit also has a positive and significant effect on financial performance of women owned enterprise and Investment habit also has a positive and significant effect on financial performance of women owned enterprises. The study concludes that saving habit has positive and significant effect financial performance of women owned enterprises, Credit habit also has a positive and significant effect on financial performance of women owned enterprises and Investment habit also has a positive and significant effect on financial performance of women owned enterprises. The study recommends that government agencies should organize financial education programs along with micro-finance organizations and banks to raise awareness of importance of saving, borrowing and investing in financial growth of every business from the starting point.