Mobile telephony, social networks and credit access: Evidence from MSMEs in Kenya

Abstract

Access to credit by micro, small and medium enterprises is key for growth and employment. However, it is hindered by information asymmetry. We investigated the effect of mobile telephony and social networks (group networks) on the probability of access to credit by Micro, Small and Medium enterprises in Kenya. Our analysis employed cross-sectional data, the 2016 FinAccess Household Survey infographics sheet. The analysis assumed a limited dependent variable modelling. Our analysis revealed that micro-, small-and medium-sized enterprises with owners who currently have mobile banking, mobile money and group participation, respectively, have 8.8, 6.05 and 1.97 percentage points higher chance of receiving formal credit. In terms of informal credit, the analysis revealed that below five groups participation in an extra group by the MSME owner increases the probability of accessing informal credit by 6.26 percentage points. As policy measures, our analysis implies that owners of MSMEs should participate in groups and take up mobile money and banking to further their MSMEs chances of accessing formal and informal credit. In addition, the findings imply that money lenders should create strategies to tap MSMEs reputation created by groups and mobile telephony.

Digitalization and Financial Inclusion in Africa

“…Oluwatayo & Oluwatayo's (2012) research on cellular telephone usage in southwestern Nigeria shows a positive correlation between mobile banking and credit provision to farmers in rural areas. Mdoe & Kinyanjui (2018) examined the role of cellular mobile telephones in accessing credit for SMEs in Kenya. Their work shows that micro-enterprises and small and medium-sized enterprises that adopt mobile banking and mobile money have an 8.8, a 6.05, and a 1.97 percentage-point chance of obtaining credit by formal means, respectively.…”

¿Cómo se usan las tecnologías de la información y comunicación (TIC), y las redes sociales (RRSS) en la micro, pequeña y mediana empresa (MIPYMES)? caso

“…En cuanto a las TIC, las investigaciones que se han realizado son sobre los efectos de las TIC en los indicadores de desempeño (Cataldo et al, 2020), la evaluación de las barreras de adopción de TIC (Singh et al, 2019), el rol mediador de la TIC en la gestión estratégica (Jones et al, 2016), la evaluación de la idoneidad de la computación en la nube (cloud computing) (Kumar et al, 2017) y el análisis de la literatura reciente sobre la adopción de las TIC (Mohanty & Mishra, 2020). Mientras que, en cuanto a las RRSS, los estudios que hay son sobre el nexo entre la orientación estratégica, RRSS, intercambio de conocimientos, innovación organizacional y desempeño (Muafi, 2020) y en la probabilidad de acceso al crédito usando RRSS (Mdoe & Kinyanjui, 2018). El porcentaje que compra electrónica oscila entre 9,3% en el caso de las Pymes y el 13,6% en el caso de las grandes.…”