Determinants of Access to Credit by Individuals in Kenya: A Comparative Analysis of the Kenya National FinAccess Surveys of 2006 and 2009

Abstract

Access to credit remains a farfetched goal to the vast majority of Kenyans. Kenya's National FinAccess Survey, 2009 revealed that 60.4% of Kenya's adult population is totally excluded from the credit market despite concerted government efforts to deepen access. This however marks a slight improvement from the 63.4% figure recorded in 2006. Using multinomial probit models, the study drew a comparative analysis of the role played by individual characteristics on access to credit from various strands in 2006 and 2009. Results indicate that increase in household size reduced access to bank loans and ASCAs while it promoted access to loans from buyers of harvest. Increase in distance to service provider led to a decline in access to credit even though the impact was marginal. On the other hand, increase in age; education and income tend to enhance access to credit but the probability of access drops as one draws close to retirement age. The study recommends that measures geared towards reduction of information asymmetry like assessing the household characteristics, increased sharing of information, increased income need to be enhanced to help deepen access to credit.