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Small Business Reliance on Bank Financing in Ghana

Joshua Abor and Nicholas Biekpe

Emerging Markets Finance and Trade, 2007, vol. 43, issue 4, 93-102

Abstract: Financing has been identified as a dominant constraint to Ghanaian small and medium-sized enterprises (SMEs). This study explores the determinants of bank financing and debt among Ghanaian SMEs. A panel regression model estimates the relation between the determinants and the bank-debt ratio. The results reveal that bank loans account for less than a quarter of SMEs' total debt financing, and show that the age and size of the firm, along with asset tangibility, have significantly positive associations with the bank-debt ratio. Profitability is significantly and negatively related to the bank-debt ratio. These findings have significant implications both at the firm level and for the support of policies aimed at improving SME financing in Ghana.

Keywords: bank loans; debts; financing; Ghana; SMEs (search for similar items in EconPapers)
Date: 2007
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