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THE EFFECT OF MULTIPLE BANKING ON THE PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN MOMBASA, KENYA


Florence Mueni Wambua

Jomo Kenyatta University of Agriculture and Technology

Dr. Fred Mugambi

Jomo Kenyatta University of Agriculture and Technology


ABSTRACT

Multiple banking has become increasingly popular across the globe and seems to have gained significant momentum. However, in spite of the growing rate of multiple banking, there is scanty information about the effects of this practice on the performance of small and medium enterprises in Kenya. The general objective of the study was to analyze the effects of multiple banking relationships on the performance of SMEs in Mombasa, Kenya. The study analyzed the effects of diversity of banking services, diversity of off-balance sheet items, diversity of relationship banking and multiple bank credit facilities on the performance of SMEs. The study utilized the descriptive survey research design. The target population for the study comprised 931 trade SMEs been licensed to carry out their businesses in Central Business District of Mombasa. A sample size of 258 SMEs was used, from which the business managers/proprietors were interviewed. The main data collection instrument was the structured questionnaire. The questionnaire was pilot-tested on 15 SMEs, which were excluded from the actual study sample. Data obtained from the pilot study was used to determine the reliability of the questionnaire, achieving a reliability coefficient of α = 0.83. The collected data was analyzed with the aid of the Statistical Package for Social Scientists (SPSS). Descriptive statistics were used to summarize the data and establish characteristics of the study population and the findings presented using frequency distributions and percentages. The Pearson’s Product Moment Correlation analyses were conducted to establish the relationships between independent and dependent variables of the study. The multiple banking variables: multiple business accounts, diversity of off-balance sheet items and diversity of relationship banking correlated positively with net asset value, profitability and growth of the SMEs.


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