Determinants of Financial Inclusion in Small and Medium Enterprises: Evidence from Ethiopia

Betgilu Oshora, Goshu Desalegn, Eva Gorgenyi-Hegyes, Maria Fekete-Farkas and Zoltan Zeman
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Betgilu Oshora: Doctoral School of Economics & Regional Science, Hungarian University of Agriculture and Life Sciences, Páter Károly u. 1, 2100 Gödöllő, Hungary
Goshu Desalegn: Department of Accounting and Finance, Faculty of Business and Economics, Kotobe Metropolitan University, Addis Ababa P.O. Box 5563, Ethiopia
Eva Gorgenyi-Hegyes: Doctoral School of Economics & Regional Science, Hungarian University of Agriculture and Life Sciences, Páter Károly u. 1, 2100 Gödöllő, Hungary
Maria Fekete-Farkas: Szent Istvan Campus Institute of Economic Sciences, Hungarian University of Agriculture and Life Sciences, Páter Károly u. 1, 2100 Gödöllő, Hungary
Zoltan Zeman: Szent Istvan Campus Institute of Economic Sciences, Hungarian University of Agriculture and Life Sciences, Páter Károly u. 1, 2100 Gödöllő, Hungary

JRFM, 2021, vol. 14, issue 7, 1-19

Abstract: The study examines the determinant factors that influence financial inclusion among small and medium enterprises (SMEs) in Ethiopia. The study uses an explanatory research design and a mixed research approach with both primary and secondary sources of data. More specifically, the study adopts a multiple linear regression model. The finding of the study reveals that; supply-side factors, demand-side factors, market opportunity, and collateral requirements have a positive effect on the firm’s access to finance. On the other hand, institutional framework factors, and the costs of borrowing negatively affect the firm’s access to finance. This study suggests concerned bodies sustain rapid and inclusive economic growth and hence eradicate extreme poverty and hunger, the policymakers must build an efficient, strong, and well-functioning financial market system that provides affordable and sustainable financial service to SMEs.

Keywords: access to finance; collateral requirements; cost of borrowing; SMEs; financial inclusion; Ethiopia (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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