Factors That Hinder Access to Credit by Small and Medium Scale Enterprises despite the Financial Sector Liberalisation in Ghana

Christine Avortri, Alhassan Bunyaminu and T. B. Wereko

International Journal of Management Sciences, 2013, vol. 1, issue 10, 386-404

Abstract: This study sought to identify factors, which perennially hinder Small and Medium Scale enterprises (SMEs) access to credit under the financial sector liberalisation policy in Ghana. The sample of 100 SMEs from the Accra metropolis was selected to represent the SME sector in the country. Data collection was originally facilitated by administering questioners to the target groups of clients, staff and management of SMEs both Countrywide and then in the Accra metropolis. The STEPWISE method of Regression Analysis was used to establish the inter-relationship between the dependent variable, which is access of credit by the SMEs and a number of explanatory, or independent variables such as Security requirement, Absence of accounting records, Difficulty in getting personal guarantors, Risk averse, Repayment terms, Banks lending policy. The study revealed that though availability of credit has improved a large number of the SMEs do not source for funds from the financial Institutions. As a result, the growth of the sector remains stunted. The Regression analysis established Security requirement, difficulty in getting personal guarantors, absence of accounting records and Risk averse as the most significant variables, in the order, which they impede access to credit of the SME sector.

Keywords: SMEs; micro; small and medium enterprises; credit; loans; Credit rationing; financial sector liberalisation (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (1)

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