Challenges of financing small, medium and micro-enterprises: The case of Botswana manufacturing sector

Mutoko, Wilbert R.; Kapunda, Stephen M.

doi:10.4102/jbmd.v5i1.17

Cited by 4 publications

(4 citation statements)

References 3 publications

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“…These challenges, according to Baby and Joseph (2016:2), account for the large credit financing gap between supply capacities of formal financial institutions and the demanding needs of SMEs. These challenges include the absence of a proper legal and regulatory framework for dealing with default cases (Baby & Joseph 2016:2;Haven 2015:3758), high transaction costs involved in doing business with SMEs (Kapunda 2015), absence of credit rating agencies (Mutoko 2015:3) and lending technologies (Kwaning et al 2015:21).…”

Section: Literature Review On the Availability Of Credit From The Formal Financial Sector To Small And Medium Enterprisesmentioning

confidence: 99%

The availability of credit from the formal financial sector to small and medium enterprises in South Africa

Asah

Louw

Williams

2020

Journal of Economic and Financial Sciences

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Research purpose: Despite SMEs contributing substantially towards sustainable economic development, they have the highest failure rate in South Africa. Thus, the aim of this research is to explore the availability of credit from the formal financial sector to SMEs from a supply side perspective.Motivation for the study: Research on improving SMEs access to financial capital from the formal financial sector will assist in reducing the failure rate of SMEs and boost economic development in South Africa.Research approach/design and method: Using an interpretivistic research paradigm, data was collected from credit and business managers from eight of the largest formal financial sector using semi-structured in-depth interviews and analysed using content analysis. Main findings:The findings revealed that collateral, annual business turnover and audited financial records are the most important factors influencing the formal financial sector to provide credit to SMEs. The lack of investment capital, collateral and financial records are the main challenges faced by the formal financial sector in approving credit to SMEs.Practical/managerial implications: Implications for government and the private sector in policy development were provided. Contribution/value-add:This research highlights the most important factors and challenges faced by SMES in accessing credit from the formal financial sector. Using a qualitative research design further contributed, from a methodological perspective, to the literature on the financing of SMEs.

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Section: Literature Review On the Availability Of Credit From The Formal Financial Sector To Small And Medium Enterprisesmentioning

confidence: 99%

The availability of credit from the formal financial sector to small and medium enterprises in South Africa

Asah

Louw

Williams

2020

Journal of Economic and Financial Sciences

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“…Considering most scholars' perspectives on factors influencing SMME borrowing (Berger & Udell 2006;Chandler 2009;Fatoki 2013;Fatoki & Asah 2011;Haron et al 2013;Makhbul 2011;Mutoko & Kapunda 2015;Myers 1984;Nguyen & Luu 2013;Sidik 2012;Zarook, Rahman & Khanam, 2013), the summary of main characteristics that influence borrowing include firm income (net profit or annual turnover) and owner's marital status, gender, highest education qualification and number of years in position.…”

Section: Empirical Literature On the Factors Influencing Small Mediumentioning

confidence: 99%

Factors influencing small, medium and micro-sized enterprises’ borrowing from banks: The case of the Botswana manufacturing sector

Mutoko

Kapunda

2017

Acta Commercii

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The objective of the study: The main objective of this study is to determine the factors that influence manufacturing small, medium and micro-sized enterprises’ (SMMEs) borrowing from banks.Problem statement: This article examines factors that affect SMMEs’ ability to borrow money from commercial banks. Empirical evidence was collected from manufacturing SMMEs.Motivation for the study: There is a scarcity of studies on factors influencing borrowing among Botswana manufacturing SMMEs.Methodology: The study employed both qualitative and quantitative research designs. The random stratified sampling technique was used to draw a sample of 100 manufacturing SMMEs from a population of 329 registered manufacturing SMMEs in Botswana. Descriptive and inferential statistics were used to analyse the data. Furthermore, multivariate logistic regression estimation was used to obtain the main objective.Main findings: The empirical results showed that longevity in position and annual turnover have positive impact on getting access to bank loans, while marital status has a negative effect on access to bank loans.Practical implications: An understanding of factors influencing borrowing can increase chances of an SMME gaining financing from commercial banks, thus solving the challenge of access to finance.Contributions: The results are significant to SMMEs, policymakers, the banking sector and other researchers. Furthermore, this study increases literature on SMME challenges and financing logistics.

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“…Based on the assumption that information asymmetry characterizes imperfect loan markets, the strategy assumes that it would be too costly for banks to collect accurate information about borrowers and monitor their actions. To protect themselves and the credit market from the adverse selection problem of rising prices and ever-increasing demand, banks in this model are assumed to maximize profits through their choice of interest and collateral (thereby reducing the probability of default on their loans), while potential borrowers are assumed to maximize profits through the choice of projects (Mutoko & Mutoko, 2015;Helsen & Chmelar, 2014). Therefore, without the aid of price, demand will exceed supply, and the market will collapse (Helsen & Chmelar, 2014).…”

Section: Determinants Of Bank Lending and Credit Accessibility Of Mic...mentioning

confidence: 99%

Mi̇kro, Küçük Ve Orta İşletmelerde Banka Kredi̇si̇ni̇n Ve Kredi̇ Eri̇şi̇lebi̇li̇rli̇ği̇ni̇n Beli̇rleyi̇ci̇leri̇

Olunuga

2022

İşletme Bilimi Dergisi

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Aim: The aim of the study is, besides other things, to establish the extent in which determinants of bank lending are implemented in association with the performance of micro, small and medium enterprises in Nigeria.Method: The study applied the econometrics method of data analysis. Secondary data for the research were gathered from the Central Bank of Nigeria's Statistical Bulletin, which has a long history of providing accessible, adequate, accurate, and reliable data. Multiple regression analysis was used in conjunction with Stata software.Findings: The study shows that bank size has a significant influence on bank lending to MSMEs, the regression coefficient further reveals that bank size is negatively associated with bank lending to MSMEs, this implies that an increase in bank size will not always bring about an increase in bank lending to MSMEs. The finding also shows that credit risk and bank liquidity have a significant influence on bank lending to MSMEs, the regression result further reveals that credit risk is negatively associated with bank lending to MSMEs, thus implying that an increase in credit risk will cause a decrease in lending to MSMEs in the same vein liquidity ratio was found to be positively related to bank lending to MSMEs, thus implying that higher liquidity ratio will propel higher bank lending to MSMEs. Finally, the finding shows that the volume of deposits and interest rates have a significant relationship with bank lending to MSMEs. The regression result further reveals that interest rate is negatively associated with bank lending to MSMEs, thus implying that an increase in interest rate will cause a decrease in bank lending to MSMEs. In the same vein volume of deposits was found to be positively related to bank lending to MSMEs, thus implying that an increase in the volume of deposits will cause an increase in bank lending to MSMEsResults: The study concluded that the determinants of bank lending have an effect on the access to capital and the development of MSMEs in Nigeria. The research suggested that banks should develop an alternative financing strategy that would alleviate lending constraints to MSMEs. This is because MSMEs are subjected to strict terms and conditions by banks, prompting them to seek other sources of funding that may be insufficient to finance their operations and ensure their survival.

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Challenges of financing small, medium and micro-enterprises: The case of Botswana manufacturing sector

Cited by 4 publications

References 3 publications

The availability of credit from the formal financial sector to small and medium enterprises in South Africa

The availability of credit from the formal financial sector to small and medium enterprises in South Africa

Factors influencing small, medium and micro-sized enterprises’ borrowing from banks: The case of the Botswana manufacturing sector

Mi̇kro, Küçük Ve Orta İşletmelerde Banka Kredi̇si̇ni̇n Ve Kredi̇ Eri̇şi̇lebi̇li̇rli̇ği̇ni̇n Beli̇rleyi̇ci̇leri̇

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