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Mungai et al., 902assessment and supervision) which, given the low levelof committed amounts of loans, leads to a problem ofeconomies of scale. Second, it leads to inaccurate riskassessments with risks often being overestimated bybanks. This overestimation of risk, coupled with highoperating costs on small scale investors‟ loans, promptsbanks to avoid these counterparties or offer rates whichare too high. It is therefore necessary to reduceinformation asymmetries between financial intermediariesand small scale investors in order to give the latter betteraccess to financing. One solution would be to promotethe development of smaller commercial banks or ruralbanks, ideally with local capital. This reduces theeconomic, geographical and cultural distances betweenbanks and small and medium enterprises (Bryne, 2005).Corter and Chen (2006) note that lenders may bereluctant to fund small scale investors with new andinnovative products because of the difficulty associated inevaluating new products. They observe that thesedifficulties are classic information problems. They areunable to obtain sufficient information about the partiesinvolved in the transaction. Small firms also lack or havelittle credit history, hence the information asymmetry(Barber and Odean, 2001).FinanceFinance has been shown to impact decision-making in arange of financial situations, including participation in thestock market and pension plans (Lusardiand and Mitchell,2006). Accordingly, the level of financial ability of aninvestor has a direct effect on their investment choicedecisions (Koke, 2004). Prior research suggests thatdeficiencies in finances are among the causes of inertiaand suboptimal financial decision-making. These studiesare generally based on subjective measures that assessindividuals‟ attitudes and behaviors in relation to generalfinancial matters. In ongoing scenario, family capital isthe most common way of financing investments inemerging/developing economy.A major adverse feature of the environment recognizedby many studies is the poor supply of external finance fornew investment ventures (Huberman, 2005). Althoughthe owners may raise most or all of the initial capital fromown sources, these are generally limited and the growthorientedinvestment ventures wishing to expand wouldneed external sources of finance such as banks andventure capital. External finance is usually not availableto most small firms for a variety of reasons. The commonview among economists is that the market for loans isimperfect and restricted in scope, even in developedeconomies, and that it fails to address the financingneeds of small investment ventures (Crosnan andOneezy, 2004). Furthermore, small investment venturesare also likely to be subject to credit rationing because ofthe information asymmetry in the capital markets (Bryne,2005). Therefore, banks are more likely to meet the creditneeds of larger firms whose ability to provide track recordand collateral is greater than smaller firms, thus offsettingthe information asymmetry effect. Small firms are lessable to provide the required collateral, and less likely toaccess finance.LiteracyFinancial literacy has wide-reaching implications forhousehold savings and investment behavior. Accordingto households lacking basic financial knowledge, savingbehaviors are dominated by basic rules of thumb.Bernheim and Garett (2003) affirm that individuals whoare exposed to financial education in high school or in theworkplace save more than individuals who are notexposed to such education. In the same regard, Lusardiand Mitchell (2007) indicate that individuals who displaylow financial literacy are less likely to plan for retirementand as a result accumulate much less wealth. Anexploratory study in the United Kingdom suggested thatfinancial capability could be conceived as encompassingfour different domains of „managing money‟, „planningahead‟, „choosing products‟ and „staying informed(Bernheim and Garett, 2003).Education systems often fail to prepare young peopleadequately to participate in decision-making. They do notdevelop the necessary analytical skills for critical thinkingor problem solving through participatory, active learning.In some cases young people are given the opportunity toparticipate in decision making without ensuring that theyreceive adequate training or access to the appropriateinformation that would enable them to make informeddecisions.Market InformationAccording to Allen and Faulhaber (2003), the mostimportant market imperfection is the lack of marketinformation. Producers are often unsure about the size ofthe local markets, the presence of other producers andthe availability of inputs both domestic and imported. Theowners are presumed to be change focused and theirhigher propensity to seek new opportunities, they mustthen be aware of the existence of the opportunities(Smith and Watts, 2010). As with any other businesses,investors operate to make a positive return on theirinvestment. Smith and Watts continue to argue that thiscan only be possible if there is a fair market for theiroutputs. For Most investors in Africa traders are thesources of market information. Most investors in Africahave been left untouched by globalization process asthey have remained isolated due to the rudimentary stageof other market supporting institutions hindering accessto markets and information (Mayer, 2009). According toChristensen and Raynor (2003) market information,especially about investments, is difficult for many smallinvestors to obtain. They argue that knowledge ofinternational markets requires both resources andmanagement capacity, both of which may be lacking in