Effects of M-Pesa adoption on financial performance of small and medium enterprises in Mombasa County

Abstract

The general objective of this study was to assess the effects of MPESA adoption on financial performance of small and medium enterprises in Mombasa County. The specific objectives were to examine the effects of transaction cost, risk management, mobile payment and mobile finance on small and medium enterprises. Traditional theory of financial innovation, financial constraints theory, transaction cost innovation theory and strategic theory of financial innovation were used for the study. This study was aiming to ascertain effects of MPESA adoption on financial performance of small and medium enterprises in Mombasa County. The transaction cost, risk management, mobile payment and mobile finance were independent variable and financial performance was dependent variable. The study findings were helpful to investment in small and medium enterprises. To achieve these results, both primary data and secondary data were collected for the study. The target population comprised of 80 small and medium enterprises in Mombasa County. A sample size of 76 small and medium enterprises was drawn from the target population. Primary data was collected using questionnaire and data analysis was done using descriptive statistics. Secondary data was collected, using journals and articles which were used to gather information. Multiple linear regression analysis was used to establish the nature of relationship between dependent variable and independent variables. The study established that transaction cost, risk management, mobile payments and mobile finance had positive significant influence on the financial performance of SMEs. Therefore, the research recommended that mobile money service providers should encourage SMEs traders to adopt the use of MPESA adoption through enhanced advertisement.