Effect of Access to Financial Services on the Financial Performance of Micro, Small and Medium Enterprises (MSMEs) in Nandi County, Kenya

Purpose: Micro, Small and Medium Enterprises (MSMEs) are critical to employment creation, income generation, and economic growth in Kenya. However, many MSMEs continue to experience poor financial performance due to limited access to formal financial services, particularly in rural areas. This study examined the effect of access to financial services on the financial performance of MSMEs in Nandi County, Kenya. Methodology: Guided by Financial Intermediation Theory, the study adopted an explanatory research design. A sample of 378 MSME owners and managers was selected from a target population of 6,820 registered enterprises using a multistage sampling technique. Primary data were collected through a structured questionnaire and analyzed using descriptive statistics, Pearson correlation, and multiple regression analysis. Findings: The findings revealed a positive and statistically significant relationship between access to financial services and financial performance. MSMEs with better access to bank accounts, mobile banking, agency banking, and credit facilities reported higher profitability, revenue growth, liquidity, and return on investment. Regression analysis further established that access to financial services was a significant predictor of financial performance, leading to the rejection of the null hypothesis. Unique Contribution to Theory, Practice and Policy: Improving access to affordable and reliable financial services enhances the financial sustainability and growth of MSMEs. It recommends strengthening financial infrastructure, expanding digital financial services, simplifying lending procedures, and promoting inclusive financial products to improve MSME performance, particularly in rural Kenya.