Quality of accounting information and SMEs’ financial performance: The mediating role of bank and informal financing

Toussaint Bugandwa Ciza, Jean Robert Kala Kamdjoug, Mahamadou Biga-Diambeidou, Ivan Djossa Tchokote and Guillain Birindwa Kibekenge

Research in International Business and Finance, 2025, vol. 75, issue C

Abstract: This study examines the relationship between the use of the quality of accounting information and the financial performance of small and medium-sized enterprises (SMEs), focusing on the underlying intermediary mechanism, namely access to bank and informal finance in the process. We processed data from 331 SMEs in the Democratic Republic of Congo (DRC) with a structural equation model and our results show that the quality of accounting information positively affects the financial performance of SMEs and access to bank financing; the results suggest informal financing positively affects the financial performance of SMEs and access to formal financing. We also find that using accounting information can lead SMEs to pay attention to informal finance, which negatively affects their overall financial performance. Our research contributes to understanding the critical role that informal finance plays in the performance of SMEs and their access to formal finance in DRC and similar financial environments in vastly underexplored African contexts where a thriving banking sector coexists with various informal financing alternatives.

Keywords: Financial performance; SMEs; Accounting information; Bank financing; Informal financing; Africa (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:75:y:2025:i:c:s0275531925000194

DOI: 10.1016/j.ribaf.2025.102763

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