Drivers of credit access among women owned manufacturing Small and Medium Enterprises in Kenya

Abstract

Access to formal credit remains a persistent constraint for women-owned small and medium-sized enterprises (SMEs), particularly within capital-intensive sectors such as manufacturing. Despite progress in financial inclusion in Kenya, significant gender disparities continue to characterize enterprise-level financing. This study examined the drivers of credit access among women-owned manufacturing SMEs in Kenya, with specific focus on credit perception and collateral availability, and further assessed the moderating role of firm size using a sample of 161firms. Anchored in the Theory of Planned Behavior and Information Asymmetry Theory, the study conceptualized credit access as jointly shaped by behavioral (demand-side) and structural (supply-side) factors. Using secondary firm-level data from the World Bank Enterprise Survey and applying binary logistic regression, the study analyzed how credit perception, collateral availability, and firm size influence the likelihood of accessing formal credit. The findings indicate that unfavorable credit perceptions significantly reduce the probability of accessing credit, confirming the presence of discouraged borrowing behavior among women entrepreneurs. Collateral availability emerged as the most dominant structural determinant, reflecting the continued reliance on asset-based lending practices in Kenya’s financial system. Importantly, firm size was found to moderate both relationships: as firm size increases, the negative effect of credit perception weakens, while the marginal importance of collateral diminishes. These results demonstrate that credit exclusion among women-owned manufacturing SMEs is not solely a function of credit supply constraints but is also shaped by perception-driven self exclusion and firm heterogeneity. The study contributes to the literature by integrating behavioral and structural perspectives within a gendered and sector-specific context. Policy implications include the need for perception-sensitive lending frameworks, alternative collateral mechanisms, and size-segmented SME finance strategies. By highlighting the interaction between behavioral constraints and structural barriers, the study provides evidence-based insights to inform more inclusive financial policies aimed at strengthening women’s participation in Kenya’s manufacturing sector.

Key Words: Women owed manufacturing SMEs, credit perception, collateral availability, firm size and credit access.