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This study identified challenges faced by borrowers, precisely small and medium-size enterprises in accessing credit facilities from financial institutions. Similarly, the paper identifies the extent to which both financiers and borrowers agree to challenges believed to hinder lending to SMEs.. A questionnaire survey method was used to collect data...
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... As start-ups are young companies, they have to face challenges in accessing resources such as raw materials, finance, human power (Pasumarti and Patnaik, 2020), lack of knowledge about potential source of funds (Sharma et al., Chatterjee, 2019), difficulty in access to finance, (Sharma et al., 2019), delayed access to loans (Tejerina, 2006), accessing debt funds (Ambrose, 2018), providing collateral and higher interest rates (Vasilescu, 2014;Singh and Wasdani, 2016;Ambrose, 2018;Ghazali and Yasuoka, 2018;Qubbaja and Jaradat, 2018;Rajamani et al., 2022), government regulations (Mensah et al., 2015;Rajamani et al., 2022), lack of knowledge about various schemes (Rajamani et al., 2022), lack of advisory services, inadequacy of funding, inadequate payment period (Gichuki et al., 2014;Qubbaja and Jaradat, 2018), high service fees (Gichuki et al., 2014;Vasilescu, 2014;Singh and Wasdani, 2016), fluctuations in exchange rates, lack of availability of capital (Mensah et al., 2015) and lack of management and default on previous loans (Ackah and Vuvor, 2011). ...
... As start-ups are young companies, they have to face challenges in accessing resources such as raw materials, finance, human power (Pasumarti and Patnaik, 2020), lack of knowledge about potential source of funds (Sharma et al., Chatterjee, 2019), difficulty in access to finance, (Sharma et al., 2019), delayed access to loans (Tejerina, 2006), accessing debt funds (Ambrose, 2018), providing collateral and higher interest rates (Vasilescu, 2014;Singh and Wasdani, 2016;Ambrose, 2018;Ghazali and Yasuoka, 2018;Qubbaja and Jaradat, 2018;Rajamani et al., 2022), government regulations (Mensah et al., 2015;Rajamani et al., 2022), lack of knowledge about various schemes (Rajamani et al., 2022), lack of advisory services, inadequacy of funding, inadequate payment period (Gichuki et al., 2014;Qubbaja and Jaradat, 2018), high service fees (Gichuki et al., 2014;Vasilescu, 2014;Singh and Wasdani, 2016), fluctuations in exchange rates, lack of availability of capital (Mensah et al., 2015) and lack of management and default on previous loans (Ackah and Vuvor, 2011). ...
... Loan defaulting as an immediate sign that necessitates loan recovery can be contributed by so many factors, as highlighted in the study conducted in Ghana using regression analysis. Mensah et al. (2015) indicated that loan defaulting is contributed by higher interest rates, moral hazards, and over-borrowing habits among customers. Furthermore, when loan beneficiaries are not visited frequently and when loans are not associated with collateral, the possibility of defaulting is higher. ...
The study aimed to determine the procedures employed by MFIs, specifically in loan recovery in Tanzania. Loan recovery has been a difficult task for many financial institutions but becomes more challenging to microfinance institutions due to the nature and processes they employ. The study examined the loan recovery procedures at NFBS, SMF and AML found in Dar-Es-Salaam, Tanzania. The researcher employed a mixed- case study design, which involved 50 credit officer respondents obtained under the purposive sampling. The study used semi-structured questionnaires to gather primary data and also secondary data from documents available at NFBS, SMF and AML. Data were analysed using simple descriptive statistics with percentages and frequencies for quantitative data, while thematic analysis was used for qualitative data. The study found that NFBS, SMF and AML used loan recovery procedures such as direct contact, friendly reminder, and issuance of final demand notice. Another procedure is to inform the local government on property selling and using a debt collection agency. The study recommends for MFIs to establish and prefer formal procedures that can be used for loan recovery because the use of informal procedures creates room for conflict and leads to ineffectiveness of recovering loans.
... Business environment is facing spontaneous and unpredictable changes mostly because of rapid evolution of financial engineering. The impact of this engineering revolution is directly felt by SMEs as it drastically changes their core and fundamental operational capabilities (Mensah et al., 2015;Swierczek and Ha, 2003). Kurtulus (2012) stated that, the business environment is increasingly becoming complex and businesses must become accustomed to changes posed by the complexity of the environment which requires the organization"s new perceptive to be more competitive, but many organizations have not been able to complement their internal business environment with the external business environment thereby resulting in organizational deficit making them largely unproductive on the long run Also, a positive connection has been recognized among operating environment and business growth in developed countries (Harris and Gibson, 2006). ...
Small and Medium Enterprises are the major engine room for growth of every nation.In recent times, studies have shown that business processes have become complex and these have affected the sustainability of SMEs. Changes in business processes require organizations to be dynamic and exploit opportunities perceived to influence performance of small and medium enterprises (SMEs). The study examined the effect of financial reengineering on the growth in performance of SMEs in Nigeria. The study employed survey research design. The sampled population was 11,663 SMEs in Lagos State,the business heartbeat of Nigeria. Using Taro Yamane formula, Sample size was 387. The owners/managers of these SMEs were selected through a multi-stage sampling technique involving stratified and proportionate sampling method. 387 copies of structured questionnaire were administered with a retrieval rate of 100%. Cronbach alpha coefficient ranged from 0.707 to 0.832. Descriptive and inferential statistics were used for data analysis. The findings revealed that financial re-engineering has significant effect on sales growth of SMEs.........
... Other studies (Mensah, Azinga & Sodji, 2015;Mbroh &Attom, 2011;Musah, Gakpetor & Pomaa, 2018;Prempeh, 2015) in Ghana revealed that most owners and managers of SMEs had limited formal education and weak management skills, and that these deficiencies inhibit the growth and sustainability of their businesses. For example, a study by Afrifa (2013) on the impact of education and work experience on SME financial management concluded that managers who had more education and experience were better placed for financial management. ...
The promotion of financial management practices and growth of Small and Medium-scale Enterprises (SMEs) can contribute significantly towards the sustained elevation of a nation for a better or more humane life. SMEs play a crucial role in addressing the impediments of poverty, inequality and job creation. Yet, many SMEs face numerous challenges ranging from the lack of capital, poor management skills and the application of best financial management practices.This paper explores SMEs’ financial management skills and practices in relation to their growth. The study used questionnaire to collect data from managers or owners of SMEs. Descriptive statistics was used to present the results of the data. Not only that but also, a multiple regression model was also used to test the correlation between financial management practices of SMEs and business growth. The results indicates a moderate correlation between the financial management practices of the SMEs and the growth of the enterprises. Based on the findings, it is recommended for targeted financial education programmes to help managers and owners of SMEs develop and adopt best financial management practices.
... Das (2008) observed that unless fairly detailed information on small firms was available, banks would hesitate to take the risk and may prefer to lend to relatively larger firms, thus leaving smaller firms significantly constrained for capital. Mensah, Azinga, and Sodji (2015) identified challenges faced by small-and medium-size enterprises in accessing credit facilities from financial institutions. The study found that high inflation, lack of adequate capital, high interest rate in the capital market and exchange rate fluctuation were the challenges faced by small-and medium-size enterprises in accessing credit facilities from financial institutions. ...
Micro and small enterprises (MSEs) play an important role in the development of Indian economy. Finance is the lifeblood of MSEs. They get finance from both long-term sources and short-term sources. There are various factors affecting procurement of finance from long-term sources and short-term sources by the enterprises. The present study has assessed the relative importance of factors affecting procurement of finance from short-term sources by MSEs in the Barak Valley of Assam. The enterprises which are registered with District Industries and Commerce Centres of the three districts of the valley, namely Cachar, Karimganj and Hailakandi as on 31 March 2012 and which are still functioning have been studied. Sample size of the study is 246 of which 81.71 per cent are micro enterprises and 18.29 per cent are small enterprises. The study is based on primary data. The sampling technique of the study is ‘convenience sampling’. Arithmetic mean, rank and standard deviation have been used for data analysis. The hypotheses are tested with the help of the statistical technique ‘Mann–Whitney U test’.
... The subject is studied extensively in Ghana (e.g. Thomi and Yankson, 1985;Anheier and Seibel, 1987;Steel and Webster, 1992;Baah-Nuakoh, 1993, Aryeetey et al. 1993Mensah et al, 2015;Fuseini, 2015;Nyanzu and Quaidoo, 2017). Thomi and Yankson (1985) found that majority of their sample firms lacked access to finance which limited their growth and expansion. ...
... Studies conducted in Ghana have revealed similar contributing factors (e.g. Hammond and Odei, 1996;Ackah and Vuvor, 2011;Cofie 2012;Torgbor, 2014;Mensah et. al. 2015;Avevor, 2016). Ackah and Vuvor (2011) reported that SME were unable to provide the information required by banks, which included audited financial statement. Mensah et al. (2015) sort the perception of both the SMEs and Stanbic Bank (Ghana) and concluded that the SME challenges are in two categories. The first contained challenges percei ...
... Ackah and Vuvor (2011) reported that SME were unable to provide the information required by banks, which included audited financial statement. Mensah et al. (2015) sort the perception of both the SMEs and Stanbic Bank (Ghana) and concluded that the SME challenges are in two categories. The first contained challenges perceived to be faced by only SMEs. ...
Small and medium enterprises (SMEs) play a significant role in a country's social-economic development. Unfortunately, they are restricted in accessing the capital they require to function effectively in the construction industry. This study investigated the situation from the perspective of contractors operating within the construction industry in Ghana. The quantitative approach to research was adopted using survey questionnaires. With a response rate of 48 percent from 400 questionnaires distributed, the paper gauges the perception of construction firms on the financing constraint and the factors contributing to such constraints. The Chi-Square test was employed to ascertain whether there existed significant differences between the personal and organisational characteristics of firms and financing challenges. The challenges associated with financing of construction firms are multifaceted. To a large extent, the financial class of construction firms was related to their financing constraints. Efforts to mitigate the problem need to be addressed holistically. Perhaps, it is about time consideration is given to establishing a specialised bank for construction. Such a bank would understand the peculiar nature of the construction industry to be able to handle the associated risks. The government, and interested development agencies, has a role to play in ensuring the success of such bank.
... The subject is studied extensively in Ghana (e.g. Thomi and Yankson, 1985;Anheier and Seibel, 1987;Steel and Webster, 1992;Baah-Nuakoh, 1993, Aryeetey et al. 1993Mensah et al, 2015;Fuseini, 2015;Nyanzu and Quaidoo, 2017). Thomi and Yankson (1985) found that majority of their sample firms lacked access to finance which limited their growth and expansion. ...
... Studies conducted in Ghana have revealed similar contributing factors (e.g. Hammond and Odei, 1996;Ackah and Vuvor, 2011;Cofie 2012;Torgbor, 2014;Mensah et. al. 2015;Avevor, 2016). Ackah and Vuvor (2011) reported that SME were unable to provide the information required by banks, which included audited financial statement. Mensah et al. (2015) sort the perception of both the SMEs and Stanbic Bank (Ghana) and concluded that the SME challenges are in two categories. The first contained challenges percei ...
... Ackah and Vuvor (2011) reported that SME were unable to provide the information required by banks, which included audited financial statement. Mensah et al. (2015) sort the perception of both the SMEs and Stanbic Bank (Ghana) and concluded that the SME challenges are in two categories. The first contained challenges perceived to be faced by only SMEs. ...
... In Nigeria, for instance, Okpara and Kabongo (2009) concluded in their studies that the inability to raise external capital due to the lack of required collateral to be used against loans was the major reason as to why new ventures were facing a high rate of failure. Likewise in Ghana, Mensah et al. (2015) observed that banks were imposing stringent collateral conditions to SME borrowers who strongly perceived that the lack of collateral was their challenge par excellence in their inaccessibility to finance. ...
Small and medium enterprises (SMEs) play a significant role in income generation, job creation, poverty reduction and reducing income inequality of all countries, regardless of the level of development. Nevertheless, in developing countries, they are exposed to several challenges affecting their business operations and growth. Among others, access to external financing has been cited to be the most pressing challenge for SMEs in developing economies. The lack of accessibility has been indicated to result from the deficiencies observed from both financial institutions and SMEs. Further, it has been discovered that from the SMEs’ perspective, gender, among other entrepreneurial characteristics, has a role in accessing finance. This paper surveys a sample of 109 SMEs in the Democratic Republic of Congo not only to find what are the challenges faced in seeking finance, but also to investigate the extent to which gender impacts access to finance. The evidence gathered shows that finance is really constraining, there are more rejections than approvals of finance due to the lack of collateral, high interest rates and the inability of SMEs to develop attractive and bankable projects. With regards to gender, the findings were somehow assuring in the sense that when both women and men apply for external finance, they stand the same chances of accessing finance. Recommendations were established to all the actors. SMEs must put more effort into regulating their businesses in order to reduce their risks and build strong relationships with lenders. Financial institutions should not only reconsider the interest rates as they were perceived to be extremely high, but also train SMEs to be “more bankable”. Lastly, the Government should implement policies to support firms and render the business environment more appealing for both SMEs and financial institutions. © Atsede Woldie, Bushige Mwangaza Laurence, Brychan Thomas, 2018
Community economic development is a relatively new strategy employed to increase employment, income, and entrepreneurship activities in small town and communities. The Centre for Islamic Economics, International Islamic University Malaysia (IIUM) has initiated a smart partnership with CIMB Islamic Bank to offer entrepreneurship training and Islamic microfinance facility to the poor in Malaysia. This project adopts several modes of Islamic microfinance financing instruments which include equity-based and debt-based financing. The program aims to educate the communities surrounding the IIUM campus with entrepreneurship knowledge and skill in addition to giving Shariah-compliant micro-financing facility for them to implement their business ideas. CIMB Islamic, which is the main partner for this project, provides funds for Islamic microfinance facilities and IIUM contributes expertise in providing entrepreneurship trainings to the communities located near IIUM campus. It is hoped that this smart partnership would empower the surrounding communities and create more successful entrepreneurs.
