Assessing Determinants of Financial Constraints on Small and Medium Enterprises in Kumasi Metropolis, Ghana
Journal of Business and Economic Development
Volume 2, Issue 4, November 2017, Pages: 198-203
Received: Dec. 11, 2016;
Accepted: May 27, 2017;
Published: Jun. 28, 2017
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Francois Mahama, Department of Mathematics and Statistics, Ho Technical University, Ho, Ghana
Etornam Kwame Kunu, Department of Mathematics and Statistics, Ho Technical University, Ho, Ghana
Patience Ama Nyantakyiwaa Boahen, Registry Department, Takoradi Technical University, Takoradi, Ghana
Albert Kweku Bediako, Department of Logistics and Supply Chain Management, Ho Technical University, Ho, Ghana
This study seeks to determine the hitches of accessing financial institutional loans; determine the sources of financial assistance to SMEs apart from financial institutions and determine the determinants of financial constraint on SMEs in the Kumasi Metropolis, Ghana. A descriptive, cross-sectional survey was conducted among 300 purposively selected SME operators. Both descriptive and inferential statistics were computed during the analysis of the data using both SPSS and Microsoft Excel. Results show that the hitches they encountered are “high interest rates”, “lack of business registration”, “lack of collateral” and “poor or no business plan”. Also about 34.3% depend on personal savings, 32.7% of them depend on the firm profit and 21.3% of them also depend on assistance from family and friends whilst 11.7% of them also depend on trade credit as other sources of finance. Finally, the “Age of the firm”, “Professional and entrepreneurial experience”, “Firm ownership type”, “Performance of the firm”, and “High interest rate payments” were the determinants of financial constraints on SMEs. Therefore, SMEs should endeavor to formalize their business operations registration and pay appropriate taxes. Government should also create favourable environment and policies that will reduce the financial constraints on SMEs leading to success of entrepreneurship in the country.
Etornam Kwame Kunu,
Patience Ama Nyantakyiwaa Boahen,
Albert Kweku Bediako,
Assessing Determinants of Financial Constraints on Small and Medium Enterprises in Kumasi Metropolis, Ghana, Journal of Business and Economic Development.
Vol. 2, No. 4,
2017, pp. 198-203.
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