The Determinants of Credit Access and Its Impacts on Micro and Small Enterprises: The Case of Garment Producers in Kenya

There are diverse sources of credit for micro and small manufacturing enterprises (MSEs) in developing countries, ranging from relatives and friends, rotating savings and credit associations (ROSCAs), micro finance institutions, and commercial banks. Using a unique set of data on MSEs in garment clusters in Nairobi, this study attempts to identify the determinants of access to different credit sources and their impacts on firm profitability and growth. The results of the regression analysis demonstrate that factors determining access to credit are often different from those affecting enterprise performance, indicating limited impacts of credit access on enterprise performance.