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" Impact of Firm and Owner Characteristics on Access to Formal External Financing Among SMEs in North Central Nigeria "
Oke, Lukman Adebayo
Ijaya, M. A.
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Latin Dissertation
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| Language of Document
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English
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| Record Number
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1104509
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| Doc. No
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TLpq2235934697
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| Main Entry
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Ijaya, M. A.
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Oke, Lukman Adebayo
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| Title & Author
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Impact of Firm and Owner Characteristics on Access to Formal External Financing Among SMEs in North Central Nigeria\ Oke, Lukman AdebayoIjaya, M. A.
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| College
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Kwara State University (Nigeria)
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| Date
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2019
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| student score
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2019
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| Degree
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Ph.D.
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| Page No
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252
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| Abstract
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The paucity of finance to SMEs, widely reported in the literature has continued to undermine the contribution of the sector to economic growth. This scourge has partly been blamed on the SMEs’ observable characteristics which include firm factors and owner’s profile. However, the dearth of comprehensive research in this area portends the need for further studies especially in the North Central Nigeria where the problem is reportedly endemic. Against this backdrop, the study examined, from both SMEs and banks’ perspectives, the impact of firm and owner characteristics on access to formal external financing in the North Central Nigeria. The specific objectives of the study were to: (i) examine the nature of access to finance among SMEs in the North Central Nigeria; (ii) evaluate impact of firm specific characteristics on access to bank finance among SMEs in the North Central Nigeria; (iii) investigate if owner characteristics influence access to bank finance among SMEs in the North Central Nigeria; (iv) examine the firm specific factors influencing credit status of SMEs in the North Central Nigeria; (v) assess the owner factors determining credit status of SMEs in the North Central Nigeria; and (vi) determine the firm and owner characteristics influencing banks’ credit approval for SMEs in the North central Nigeria. Data were drawn from the primary source through the adaption of World Bank and OECD Financial literacy questionnaires to elicit responses from the sampled SMEs owners/ managers and bank loan officers in study area. A sample of 280 SMEs and 207 loan officers were drawn from the population of 1030 SMEs and 448 banks respectively. Descriptive statistics, binary logit regression model with Marginal effect, ordered logit with average partial effect and Kruskal Wallis H were employed in analyzing the data. The findings of the study were: (i) external credits are relatively less utilized for startup, working capital and acquisition of non-current asset due to the risk averse behaviour of banks in North central Nigeria; (ii) firm size, firm age, incorporation status, industry, financial information, firm location and firm collateral which are significant at 0.1,0.1,0.05,0.05, 0.01, 0.1 and 0.1 respectively, are the firm specific characteristics impacting on access to bank finance among SMEs. Whereas financial stability is insignificant at 0.01; (iii) owner’s gender, owner’s networking and relationship with bank are the owner characteristics influencing access to bank finance among SMEs, significant at 0.05, 0.1 and 0.1 respectively, and that owner’s age, education, experience, financial literacy and personal wealth do not have significant influence on access to bank finance among SMEs in the region; (iv) firm size, industry, financial information, firm collateral and financial stability which are significant at 0.01,0.01,0.01,0.0, 0.01and 0.1 respectively, are the firm specific characteristics influencing the probability of not being credit constrained among SMEs in the region. Whereas firm age, incorporation status and firm location are insignificant; (v) owner’s gender, owner’s age, education, financial literacy, owner’s networking and relationship with bank are the owner characteristics influencing the probability of not being credit constrained among SMEs in the region, significant at 0.01, 0.01, 0.01, 0.01, 0.01 and 0.05 respectively, and that owner’s experience and personal wealth do not have significant influence on probability of not being credit constrained among SMEs in the region; and (vi) all the study’s firm and owner’s characteristics, which are all significant at 0.01, are the factors influencing banks’ credit approval for SMEs in the North Central Nigeria The study concluded that SMEs in the North Central Nigeria encounter serious paucity of finance as they are virtually oblivious of, or not fully exploring all firm and owner related factors influencing their access to formal external finance from financial institutions. The study recommended that SMEs should fully explore all firm and owner factors, at individual level, for improved access to financial market. Also, they should synergise by forming strong alliance and solicit credits as a consortium rather than as individual units to facilitate better access and at relatively cheaper costs.
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| Subject
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Accounting
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