FIRM CHARACTERISTICS AND FINANCIAL PERFORMANCE OF BUSINESSES FUNDED BY YOUTH ENTERPRISE DEVELOPMENT FUND IN BARINGO CONSTITUENCY, BARINGO COUNTY, KENYA
Abstract
Purpose of the Study: To investigate the impact of firm characteristics on the financial performance of businesses funded by the Youth Enterprise Development Fund (YEDF) in Baringo Constituency, Baringo County, Kenya.
Statement of the Problem: Unemployment persists globally, and despite YEDF's efforts to boost youth entrepreneurship in Kenya, including Baringo Constituency, financial performance of youth-funded businesses remains subpar, hindering Vision 2030 goals.
Methodology: The study adopted a descriptive research design and used a simple random sampling technique to select 83 respondents from a target population of 104 youth entrepreneurs. Primary data was collected using structured self-administered questionnaires. Data analysis involved descriptive and inferential statistics, including correlation and regression analyses, with results presented in tables and graphs using SPSS software.
Findings: The study established that firm characteristics such as source of funding, ownership structure, firm age, and firm size significantly influence the financial performance of YEDF-funded businesses. Specifically, financial and working capital had a positive effect on financial performance, while firm age and ownership structure demonstrated significant contributions. Firm size and business sector had mixed effects, highlighting the complex role these factors play in financial outcomes.
Recommendations: The study recommends strengthening financial models and addressing challenges such as political interference, mismanagement, and eligibility criteria to enhance access to YEDF funding.
Keywords: Youth Enterprise Development Fund, firm characteristics, financial performance, SMEs, Baringo County
References
Adeyeye, A. (2016). Challenges to SMEs Growth in Kenya. How We Made It in Africa. South Africa: Maritz C.C.
Akben-Selcuk, E. (2016). Does Firm Age Affect Profitability? Evidence from Turkey. International Journal of Economics Science, 5(3), 1-9.
Alkurdi, A., Hamad, A., Thneibat, H., & Elmarzouky, M. (2021). Ownership Structures Effects On Financial Performance: An Empirical Analysis of Jordanian Listed Firms. Cogent Business & Management, 7(1).
Egbunike, C. F., & Okerekeoti, C. U. (2018). Microeconomic Factors, Firm Characteristics and Financial Performance: A Study of Selected Quoted Manufacturing Firms in Nigeria. Asian Journal of Accounting Research, 3(2), 142-168.
Haykir, M., & Celik, M. (2018). The Impact of Firm Age on Financial Performance: Evidence from the Turkish Stock Exchange. International Journal of Economics, 6(3), 45-60.
International Finance Corporation. (2022). Banking on SMEs: Driving Growth, Creating Jobs. Insights-Reports.
KAA. (2016). Challenges Faced by Small and Medium Enterprises in Kenya. Kenya African Association.
Kisseleva, K. (2021). Public Funding and Financial Performance of Entrepreneurial Firms. Unpublished Doctoral Dissertation, European School of Management and Technology, Berlin.
Mallinguh, E., Wasike, C., & Zoltan, Z. (2020). The Business Sector, Firm Age and Performance: The Mediating Role of Foreign Ownership and Financial Leverage. International Journal of Financial Studies, 8(4), 79.
Muthoni, W. A. (2016). The Effects of Youth Enterprise Development Fund On Small and Medium Enterprises: A Case of Maragua Constituency. Unpublished Undergraduate Project, Mmarua Institutional Repository, Nairobi.
Ngatia, W. R. (2019). Firm Characteristics and Growth of Small and Medium Enterprises in Nyeri County, Kenya. Master's Thesis, Kenyatta University.
Odalo, S., Achoki, G., & Njuguna, A. (2016). The Effect of Firm Size on Financial Performance of Listed Agricultural Companies in Kenya. Journal of Business Studies Quarterly, 7(2), 124-135.
Oyelade, A. O. (2019). The Impact of Firm Size on Firms Performance in Nigeria: A Comparative Study of Selected Firms in the Building Industry in Nigeria. Asian Development Policy Review, 7(1), 1-11.
Pervan, M., Pervan, I., & Curak, M. (2017). The Influence of Age on Firm Performance: Evidence from the Croatian Food Industry. Journal of Eastern Europe Research in Business and Economics, IX.
Sikenyi, M. (2017). Does the Kenyan Youth Enterprise Development Fund Serve Young People? Transforming Development Knowledge, Institute of Development Studies. Nairobi: IDS Bulletin.
Taouab, O., & Issor, Z. (2019). Firm Performance: Definition and Measurement Models. European Scientific Journal, 15(1), 93.
Too, I. C., & Simiyu, E. (2019). Firms Characteristics and Financial Performance of General Insurance Firms in Kenya. International Journal of Business Management and Finance, 2(1).
World Bank Group. (2023). Small and Medium Enterprises (SMEs) Finance. The World Bank
