The study was guided by analyzing the contribution of commercial banks in economic development of SMEs The target population for the study consisted of registered SMEs in KCBR as their clients.A descriptive research design as well as an explanatory research design was used. The study used Bouchard formula to sample SMEs and then used random sampling to select the 105 SMEs. The respondents of the study were the owners and managers of the SMEs. The study used questionnaires to collect quantitative data using closed ended questions
.
Data analysis will be done using SPSS statistical software version 21. Descriptive statistics (Frequencies, Means and Standard deviation) and inferential statistics (Correlations and regression) were used in analysis. A multiple linear regression model was used for analysis and all tests were conducted at 5% level of significance. The study findings indicated that banking services are positively related with economic development of SMEs. The study concluded that commercial banks in Nyarugenge district are favorable. The study also concluded commercial bank services are effective and they economic development of SMEs significantly.
SMEs in Rwanda suffer from weak financial performance and a high failure rate. Scholars argue that judging by the poor economic development of the informal sector, not much progress seems to have been achieved, despite government efforts to promote SME activity. Some of the key factors attributed to this poor performance is access to financial services. Therefore, the purpose of this study was to examine the contribution of commercial banks in economic development of SMEs
Normally, SMES play vital and significant contributors to economic development through their critical role in providing job opportunities and reducing poverty levels, an estimated number of up to 40% of the start-ups SMEs fail by year 2 and at least 60% close their doors by year 4.
This menace is attributed to poor financial management among small businesses. Accessing credit is a major constraint to the economic development and growth of SMEs and also to poor rural and urban households. This is mainly due to the behavior of lenders in terms of hedging against borrowers’ risks by demanding collateral, which they lack, and also information asymmetry.
Inhaltsverzeichnis (Table of Contents)
- OPERATIONAL DEFINITION OF TERMS
- ABBREVIATIONS AND ACRONYMS
- ABSTRACT
- GENERAL INTRODUCTION
- INTRODUCTION
- PROBLEM STATEMENT
- OBJECTIVES OF THE STUDY
- GENERAL OBJECTIVES
- SPECIFIC OBJECTIVES
- RESEARCH QUESTIONS
- Hypothesis1
- Hypothesis 2
- Scope of Study
- Time Scope
- Geographical Scope
- Content Scope
- Significance of the Study
- To the researcher
- To owners and managers of KCB
- To the ULK Community
- To SMEs
- CHAPTER ONE: LITERATURE REVIEW
- Introduction
- Conceptual Review
- Commercial banks
- Bank
- Loan
- Small and medium enterprise
- Economic Development
- THEORETICAL REVIEW
- THEORIES OF COMMERCIAL BANKS
- HISTORY OF BANKING
- Origin of the word bank
- Types of banks
- Financial Services of commercial banks offered to SMEs
- Deposit and lending services
- Payment services
- Investment Services
- Corporate Credit Cards
- Bookkeeping
- Contribution of commercial banks in economic development of SMEs
- Theories of SMEs economic development
- Background of SMEs in Rwanda
- Enabling Policy Environment and Infrastructure
- Access to finance in Rwanda SMEs
- FACTORS AFFECTING THE ECONOMIC DEVELOPMENT OF SMES
- Innovation
- Management skills and actions
- Competition
- Government policies
- Work experience
- Market condition
- Inadequate education and skills
- Lack of credit
- Technological Change
- Scanty Markets Information
- Measuring the economic development of SMEs
- Economic Development Indicators in SMEs
- Capital growth
- Sales growth
- Employment growth
- Review Related Literature
- Conceptual framework
- CHAPTER TWO: METHODOLOGY
- Research design
- Population study
- Sample size and selection
- Types of the Data
- Data Collection Methods and Instruments
- Interview
- Questionnaire
- Reliability and validity
- Reliability
- Validity
- Documentary Review
- Data Analysis Technique
- CHAPTER THREE: PRESENTATION OF FINDINGS
- General Characteristics of the Respondents
- Response rate
- Demographics Analysis
- Age of Respondents
- Level of education
- Descriptive Analysis
- EFFECTIVENESS KCBR FINANCIAL SERVICES TO SMEs
- Types of Financial Services
- Saving and Deposit Services
- Training Services
- Criteria Required for SMES Loan in KCBR
- Size of Loans Amount Applied And Received By The SMEs In KCBR Nyabugogo Branch
- Evolution of loans applied and received by customers
- Contribution commercial banks in economic development of SMEs
- Sources of Funds for SMEs
- Shareholder’s equity
- Loans from Relatives and Friends
- Trade or Business-to-Business Credit from Suppliers:
- Loans or Business-to-Business Credit from Equipment Sellers
- Mortgage Loans
- Commercial Bank Loans
- Venture Capital Funding
- Financial performance of SMEs
- FINANCIAL PERFORMANCE OF SMEs BEFORE AND AFTER GETTING KCBR FINANCIAL SERVICES
- Increase of the capital
- Increase of the sales
- Increase of the profit
- Correlation Analysis
- Regression analysis before moderation
- SUMMARY OF FINDINGS
- CONCLUSIONS
- RECOMMENDATIONS OF THE STUDY
- REFERENCE
- The effectiveness of financial services provided by commercial banks, particularly loans, savings, insurance, and training programs, in supporting SME development.
- The role of commercial banks in providing access to finance and the challenges SMEs face in obtaining loans.
- The impact of commercial bank services on SME financial performance, including profitability, sales growth, and capital expansion.
- The relationship between commercial bank services and various economic development indicators for SMEs.
- The importance of government policies and infrastructure in supporting a conducive environment for SME growth.
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This study aims to examine the contribution of commercial banks in the economic development of Small and Medium Enterprises (SMEs) in Rwanda. The study focuses on the Kenya Commercial Bank (KCB) Rwanda Ltd., specifically their Nyabugogo branch, analyzing data from 2017 to 2019. The objective is to determine the effectiveness of financial services offered by KCB to SMEs and assess the bank's overall contribution to their economic development.
Zusammenfassung der Kapitel (Chapter Summaries)
Chapter 1: Literature Review delves into the conceptual and theoretical frameworks surrounding commercial banks, SMEs, and economic development. The chapter explores the historical evolution of banking, various types of banks and their services, and the role of commercial banks in financial intermediation. It also examines the definition and characteristics of SMEs, including their importance to national economies. The chapter explores key factors influencing SME economic development, such as innovation, management skills, competition, government policies, and access to finance. It concludes by highlighting the specific challenges SMEs face in accessing credit and the need for a comprehensive understanding of their financial needs.
Chapter 2: Methodology outlines the research design, population, sample selection, and data collection and analysis methods employed in the study. The chapter provides a detailed explanation of the descriptive research design, the target population of SMEs, and the sampling technique used to select a representative sample. It further discusses the data collection methods, including questionnaires, interviews, and document review, as well as the measures taken to ensure reliability and validity of the research instruments.
Chapter 3: Presentation of Findings analyzes the collected data and presents the results in relation to the study's objectives. The chapter examines the effectiveness of KCB's financial services to SMEs, exploring the various types of services offered, the criteria used for loan approval, and the amounts of loans applied for and received. The chapter analyzes the contribution of commercial banks in the economic development of SMEs, focusing on the sources of funds for SMEs, their financial performance before and after accessing KCB services, and the impact of these services on key indicators like profitability, sales, and capital growth. Finally, the chapter presents the results of correlation and regression analyses, revealing the statistical significance of the relationship between commercial bank services and SME economic development.
Schlüsselwörter (Keywords)
This study focuses on the contribution of commercial banks in the economic development of SMEs in Rwanda. The key concepts explored include commercial banks, SMEs, economic development, financial performance, access to finance, loan services, savings services, insurance services, training services, government policies, infrastructure, and financial indicators.
- Quote paper
- Hitiyise Samuel (Author), 2021, Commercial banks in economic development of SMEs. An analysis of their contribution, Munich, GRIN Verlag, https://www.grin.com/document/1037247
