Deconstructing involuntary financial exclusion: a focus on African SMEs

Simba, Amon; Tajeddin, Mahdi; Dana, Léo‐Paul; Soriano, Domingo Enrique Ribeiro

doi:10.1007/s11187-023-00767-1

Cited by 12 publications

(7 citation statements)

References 141 publications

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“…However, the decision to pursue external finance is complex due to inherent financial and operational risks (Cubeddu et al 2023). Factors such as business size, creditworthiness, and the economic environment influence SMEs' access to external financing (Nordin and Zainuddin 2023;Simba et al 2024;Wasiuzzaman et al 2020). SMEs in Saudi Arabia face additional challenges in obtaining external financing.…”

Section: Theoretical Framework and Hypothesesmentioning

confidence: 99%

Perceived Risk and External Finance Usage in Small- and Medium-Sized Enterprises: Unveiling the Moderating Influence of Business Age

Adam

2024

JRFM

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The attainment of adequate finance remains a substantial hindrance for small- and medium-sized enterprises (SMEs) across many countries. This study aim to investigate the association between SMEs’ external finance utilization and perceived risk (PR). Additionally, it intends to explore the moderating role of business age (BAge) in the relationship between SMEs’ external finance utilization and PR. The study employed a structured online questionnaire to gather data from 711 SME owners/managers in Saudi Arabia. SmartPLS 4 software was utilized to analyze the research data. The results of the partial least squares structural equation modeling confirmed that the decision of SMEs to use external financing is significantly and negatively impacted by the PRs associated with external finance. Furthermore, BAge moderates the relationship between PR and SMEs’ external finance usage (EFU). However, the study found that BAge does not significantly affect both the PRs and the SMEs’ EFU. This study highlights the intricate dynamics of PR, BAge, and an SME’s decision to employ external finance. The practical and theoretical implications of the study findings are thoroughly discussed.

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Section: Theoretical Framework and Hypothesesmentioning

confidence: 99%

Perceived Risk and External Finance Usage in Small- and Medium-Sized Enterprises: Unveiling the Moderating Influence of Business Age

Adam

2024

JRFM

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“…Moreover, the informationally opaque nature of SMEs subjects them to greater bank scrutiny, which increases credit rationing (Bartoli et al, 2013;Ferri and Murro, 2015). Although financial ratios can indicate effective financial management and signal creditworthiness (Abiodun Eniola and Entebang, 2015), SMEs are not able to consistently present audited financial information (Berger and Udell, 1995;Simba et al, 2023;Turkson et al, 2022).…”

Section: Institutional Context and Institutional Voidsmentioning

confidence: 99%

Entrepreneurial financing: how global and regional export intentions affect financial and non-financial choices for small and midsized enterprises in low-income countries

van Klyton,

Arrieta-Paredes,

Byombi Kamasa

et al. 2024

IJEBR

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PurposeThe study explores how the intention to export affects financing and non-financing variables for small and medium-sized enterprises (SMEs) in a low-income country (LIC). The objectives of this study are (1) to discern between regional and global exporting and (2) to evaluate its policymaking implications.Design/methodology/approachPrimary survey data were collected from 330 Rwandan SMEs and were analysed using ordered logistic models as an application of the expectation-maximisation iterating algorithm, which was tested for robustness using a sampling model variation.FindingsThe results show that alternative sources of finance are the predominant choice to finance the intention to export within and outside Africa. As the scope of export intentions broadened from regional to global, there was a shift in preferences from less formal to more formal lending technologies, moving from methods like factoring to lines of credit. Moreover, reliance on bank officers became more significant, with increasing marginal effects. Finally, the study determined that government financing schemes were not relevant for SMEs pursuing either regional or global exporting.Practical implicationsWhilst alternative sources of finance predominate the export intentions of Rwandan SMEs, establishing a robust banking relationship becomes crucial for global exporting. Despite this implication, the intention to export should prompt more transparent communication regarding government financial support programmes. There is an opportunity for increased usage of relationship lending to customise support for SMEs involved in exporting, benefiting both the private and public sectors.Originality/valueThis study accentuates how export distance alters SME financing priorities. The results also contribute to understanding how the value of relationship lending changes when less familiar markets (i.e. global exporting) are the objective. Moreover, the study offers a new perspective on how institutional voids affect entrepreneurial financing decisions in LICs.

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“…African women often face greater financial exclusion due to cultural and societal norms. Financial inclusion initiatives can empower women economically by giving them control over their finances and access to economic opportunities (Simba et al, 2023).…”

Section: Financial Inclusion In Africa: Unlocking Opportunities For P...mentioning

confidence: 99%

Digital Banking and Financial Inclusion in Africa: A Review

Maxwell Alabi,

Naomi Oguntoyinbo,

Mobolaji Abioye

et al. 2023

Bus.org.soci

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This review paper examines the pivotal role of digital banking in promoting financial inclusion, with a particular focus on its implications for Africa’s economic development. The research objectives centered on elucidating the significance of digital banking in bridging the gap between the unbanked and formal financial systems, exploring strategies for its promotion, and assessing its impact on poverty reduction, gender equality, and rural development. Key findings underscored the transformative potential of digital banking, revealing that it improves access to financial services, reduces costs for users and institutions, and fosters economic growth. Furthermore, digital banking empowered women economically, provided vital support for SMEs, and enhanced resilience to economic shocks. The review highlighted the necessity of addressing challenges such as the digital divide, regulatory complexity, and data privacy concerns. Implications for Africa’s economic development are profound, as digital banking can stimulate inclusive growth, reduce poverty, and promote gender equality and rural development. A call to action for stakeholders to collaborate in creating an enabling environment for digital banking was emphasized, focusing on regulatory reforms, investments in digital infrastructure, financial literacy programs, and data security measures. Collectively, these efforts can usher in a new era of financial inclusion, unlocking the continent’s vast economic potential and fostering shared prosperity.

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Deconstructing involuntary financial exclusion: a focus on African SMEs

Cited by 12 publications

References 141 publications

Perceived Risk and External Finance Usage in Small- and Medium-Sized Enterprises: Unveiling the Moderating Influence of Business Age

Perceived Risk and External Finance Usage in Small- and Medium-Sized Enterprises: Unveiling the Moderating Influence of Business Age

Entrepreneurial financing: how global and regional export intentions affect financial and non-financial choices for small and midsized enterprises in low-income countries

Digital Banking and Financial Inclusion in Africa: A Review

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