Factors Influencing Credit Denial to Small and Medium Scale Enterprises (SMEs) In Ghana

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November, 2016
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In spite of the numerous policies and strategies to support and sustain the growth of SMEs in Ghana, SMEs are still faced with challenges especially in accessing credit from the financial institutions in the country. However, much is not known regarding the factors influencing credit denial to SMEs in Ghana. The purpose of this study is to investigate the factors that influence SMEs credit denial by the financial institutions in Ghana. A sample of 400 SMEs was selected from Kumasi Metropolis using simple random sampling technique. Logistic regression model was applied to the data. The study showed that permanent place for business, age of firm, business plan, firm’s profit level, ownership structure, registration status, credit maturity period, availability of collateral, credit history and record keeping are the major factors that influence SMEs credit denial in Ghana. The study also found that, majority of SMEs reinvest the profit generated into the business for its sustainability. It is therefore recommended that SMEs should try as much as possible to have permanent place for business and also have business plan that will guide their operations.
A thesis submitted to the Department of Economics, Kwame Nkrumah University of Science and Technology, in partial fulfillment of the requirements for the Award of Master's Degree of Science in Economics,