Micro- and small-scale enterprises’ financing preference in line with POH and access to credit: empirical evidence from entrepreneurs in Ethiopia

Hayelom Abrha Meressa ()
Additional contact information
Hayelom Abrha Meressa: Assosa University

Journal of Innovation and Entrepreneurship, 2022, vol. 11, issue 1, 1-30

Abstract: Abstract The purpose of this study was to examine factors that determine micro- and small-scale enterprises’ financing preference in line with pecking order theory and access to credit in Benishangul-Gumuz Regional State of Ethiopia. The study used primary data collected using cross-sectional survey questionnaire. The sample of this study was 296 enterprises selected using proportional stratified random sampling technique. The data were analyzed using descriptive and logistic regression analysis. The results of probit estimation revealed that business experience, collateral, gender, motivation and enterprises’ sectoral engagement affect financing preference. To investigate access to credit determinants, only enterprises that need to raise capital through credit were considered. The empirical results, therefore, revealed that business experience, size, sectoral engagement, collateral, interest rate, loan repayment period, and preparation of business plan, financial reporting, location and educational background of entrepreneurs affect access to credit of enterprises. Before any generalization of the results can be made, more evidence is needed on enterprises’ financing preference and access to credit determinants for the fact that the empirical tests were conducted only on 296 entrepreneurs since 2019. Therefore, the findings are valid and practicable only for the entrepreneurs under the study and the results cannot be assumed to extend beyond this group of entrepreneurs to different study periods. The study makes an original contribution to the literature of small business finance by investigating determinants of micro- and small-scale enterprises’ financing preference and access to credit in Benishangul Gumuz Regional State of Ethiopia as a developing country.

Keywords: Assosa Zone; Credit; Financing; Logistic regression; Micro- and small enterprises (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1186/s13731-022-00246-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joiaen:v:11:y:2022:i:1:d:10.1186_s13731-022-00246-z

Ordering information: This journal article can be ordered from
https://innovation-e ... ip.springeropen.com/

DOI: 10.1186/s13731-022-00246-z

Access Statistics for this article

Journal of Innovation and Entrepreneurship is currently edited by Elias G. Carayannis

More articles in Journal of Innovation and Entrepreneurship from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().