Examining the role of financial characteristics of micro and small enterprises in accessing debt financing: evidence from Ghana

Collins Kwaning Owusu, Kwaku Opoku Ababio, Ernest Christian Winful and Evelyn Boadiwaa Bosomtwi
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Collins Kwaning Owusu: Accra Technical University
Kwaku Opoku Ababio: Accra Technical University
Ernest Christian Winful: Accra Technical University
Evelyn Boadiwaa Bosomtwi: Accra Technical University, Accra, Ghana

International Journal of Research in Business and Social Science (2147-4478), 2024, vol. 13, issue 7, 343-353

Abstract: Given the critical role of financial characteristics in determining Micro and Small Enterprises (MSEs’) access to debt finance, it is essential to understand how these characteristics influence lending decisions, particularly from a developing market context. This study aims to examine the key financial characteristics that significantly influence MSEs’ ability to access debt finance. Using systematic sampling technique, we collect data from 171 Ghanaian MSEs that are registered with Ghana Enterprise Agency. The data was analyzed using SPSS linear regression version 24. The result shows financial management experience and profitability as the significant financial characteristics that influence MSEs ability to access debt finance. The result further shows that equity structure and financial statement have negative significant influence on MSEs ability to access debt finance. Asset tangibility, liquidity, debt service coverage ratio, and working capital has no significant influence on MSEs’ access to debt financing. Key Words:Micro and Small Enterprises, debt financing, financial characteristics, developing economy.

Date: 2024
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