Effects of Group Lending on Accessibility of Micro Credit Facilities among Low Income Households in Keiyo South District

Abstract

Formal credit market or financial sector seems to be inefficient in its current form to provide credit to the poor households despite it providing wide range of financial services, particularly credit, in Kenya. There is, therefore, a need to address this problem so as to improve access to credit thereby improving the living standards of the households. The current paper aim at assessing the effect of group lending on micro credit accessibility among the low income households living in rural and sub-urban regions of Keiyo south district. Game theory is applied in study to intuit how group borrowers play the microfinance game with the microfinance institution. This study adopted an explanatory and exploratory design. This study was conducted in Keiyo South District in Kenya; the target population was members of Women Organizations. Data for the study was obtained using structured questionnaires. Analysis of data was done using descriptive statistics specifically mean and standard deviation. Multiple regression analysis was used to test hypothesis. Study findings indicated that joint liability and more group diversity enhances accessibility of credit in group lending. However, group size does not determine accessibility of credit in group lending.

Key words: group members’ education, group diversity, group size, joint liability and accessibility of micro credit