Abstract:
This study sought to determine the effect of mobile credit on the financial prosperity of Micro and Small entrepreneurs in Nairobi. The specific objectives were to determine the effect of access to Mobile credit on the financial prosperity of small and micro entrepreneurs in Nairobi, to establish the effect of transaction costs of Mobile Credit on the financial prosperity of micro-entrepreneurs in Nairobi, to determine the effect of financial literacy on the prosperity of micro and small entrepreneurs in Nairobi; to establish Customer Satisfaction effect of Mobile Credit on financial prosperity of micro and small entrepreneurs in Nairobi; and to examine the moderating effect of government regulations on Mobile Credit on financial prosperity of micro and small entrepreneurs in Nairobi.
The study employed a -positivism paradigm and adopted an explanatory research design to establish a causal relationship between the independent and dependent variables. The study used a correlational analysis, as qualitative and quantitative research approaches were used to test research hypotheses. Primary data was obtained through structured questionnaires. A secondary data collection tool was employed for data on Profitability, Gearing, and Liquidity from accounting records kept by the respondents and business owners through filled tools. A pilot was carried out to test for the measurement tools normality, reliability, and validity. Hypothesis testing was at the bivariate level using ANOVA, with diagnostic tests for normality, autocorrelation, heteroscedasticity, and multicollinearity. The response rate was 384 respondents, or 96% of the total. Data was analyzed using Excel, Stata version 14 and SPSS Version 20. Test for Reliability of instruments resulted in the Cronbach alpha of 0.7 and above on all variables. The test for validity showed Chi2 >0.5. Test for Normality showed that the data was normally distributed. The test for Heteroscedasticity showed that the data was Heteroscedastic. The test of Collinearity using VIF indicated that the data did not suffer from severe Multicollinearity with a VIF of less than 10. There was also no first-order autocorrelation.
The findings showed that the relationship between ease of access and financial prosperity of micro-entrepreneurs in Nairobi was significant and positive. There was a negative relationship between transaction costs of mobile credit and financial prosperity of micro entrepreneurs in Nairobi; there was a significant and positive relationship between Customer satisfaction and financial prosperity of micro-entrepreneurs in Nairobi: There was a significant and positive relationship between financial literacy and financial prosperity of micro-entrepreneurs in Nairobi. There was a significant and positive relationship between the moderating effect of government regulations on the relationship between Mobile credit and financial prosperity of micro-entrepreneurs in Nairobi.
In conclusion, the overall mobile credit's effect on the prosperity of micro entrepreneurs in Nairobi is positive and significant. The implication is that mobile credit can create positive change in the prosperity of its users by increasing liquidity, provided the transaction costs are managed well. From the study, it is recommended that there would need to lower costs of transactions so as to make mobile credit affordable. In addition, the government will need to put in place regulation that are supportive of mobile credit. Moderation forms need to enable the service rather than be restrictive.