Relationship Between Information Asymmetry and Access to Finance by small and Medium Enterprises in Kenya

The study sought to find out the relationship between Information Asymmetry and access to finance by Small and Medium Enterprises in Kenya. The study was descriptive and inferential in nature. The specific objective of the study was to examine the relationship between information asymmetry and access to finance by SMEs in Kenya. The study used a mixed design that is correlational and descriptive survey design. Questionnaires were used collect data from the respondents. Purposive, Stratified and simple random sampling were used to draw a sample size of 384 SMEs owners. The study used both qualitative and quantitative data. The results indicated that the respondents were in agreement that information asymmetry determined access to finance by SMEs in Kenya. The study indicated that the SMEs faced challenges in accessing finance due to information asymmetry between them and banks. Coefficient of correlation for information asymmetry was-0.621. The regression model showed that information asymmetry explained 38.6% of access to finance by SMEs in Kenya. The study concluded that availability of information required by banks can improve access to finance by SMEs in Kenya.