Macroeconomic determinants of SME performance in Kenya
Date
2020
Authors
Kinyua, Lucy Wanjiru
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
This paper explores the relationship between SME performance, as measured by
growth in total annual sales, growth in the number of permanent full-time employees
and capacity utilization, and macroeconomic factors- the real effective exchange rate
and the terms of trade, using a sample of 45 SMEs in Kenya over a period of 3 years.
The random effects estimation technique is used and it is discovered that the real
effective exchange rate has an inverse relationship with SME performance and the
terms of trade variable has a positive relationship with performance. However, none
of the estimates are statistically significant. In addition, the data do not confidently
support the conclusions that macroeconomic factors exert a causal impact on SME
performance.
Description
Submitted in partial fulfillment of the requirements for the Degree of Financial Economics at Strathmore University