Role of financial knowledge on extent of credit access and performance of women farm enterpreneurs in Kericho County, Kenya

Abstract

Women farm enterprises in Kenya have in the recent past gained considerable prominence and attention. Several research studies have underpinned the role they can play in economic development and poverty reduction through increased production and employment. However, these farm enterprises have had limited access to credit to enhance their growth. Table banking (TB) is a concept that has been promoted, particularly among women, to enhance access to credit. The role of women farmers’ financial knowledge in influencing the extent of credit accessed and performance of women farm enterprises has not been clear in the empirical literature. In particular this study sought: to assess the level of financial knowledge among women members and nonmembers of TB groups; to determine the factors influencing the extent of credit access of women farm entrepreneurs; and to determine the role of financial knowledge on the performance of women farm enterprises. The study was based on data collected from a sample of 384 women entrepreneurs (including members and non-members) drawn from Kericho County. Multistage sampling technique was used to arrive at the intended sample and semi-structured questionnaires were used to collect qualitative and quantitative data through face to face interviews. The first objective was assessed using objective and subjective measures and was analysed using descriptive and inferential statistics. The second objective was analysed using the double hurdle model. The third objective was analysed using propensity score matching approach. The results revealed that more women belonging to table banking (71%) had high financial knowledge level compared to the counterparts (66%). The results also showed that the extent of credit accessed was positively influenced by financial knowledge, marital status, participation in off-farm occupation, risk-taking tendency, type of farm enterprise, total land owned and access to extension services; while it was negatively influenced by the degree of innovativeness and proactiveness of the women. Furthermore, financial knowledge impacted positively on performance of women farm enterprises as shown by the positive average treatment effect on the treated for all matching algorithms (ranging from KES 12265.15 to KES 19589.78) for savings and (KES 19460.60 to KES 26344.48) for enterprise margin annually. In conclusion, members of table banking exhibited high financial knowledge and that financial knowledge positively influenced both access to credit and performance of women farm entrepreneurs. Therefore, in a bid to further enhance the extent of credit accessed and performance of farm enterprises, the study recommends that, financial knowledge should be beefed up. This can be done through refocusing the modes of delivering financial knowledge to not only improving individual financial knowledge but also promoting proper use of financial resources.