- Title
- Bank finance in developing small and medium enterprise: an appraisal of relevent determinants in Rwanda
- Creator
- Gatabazi , Emmanuel Thomas
- Subject
- Economic assistance
- Subject
- Developing countries -- Economic conditions
- Date
- 2012-04
- Type
- text
- Identifier
- http://hdl.handle.net/10353/25096
- Identifier
- vital:63974
- Description
- This study examines the perceived non-availability of adequate bank financing to Small and Medium Enterprises (SMEs) with reference to Rwanda. Evidence from both developed and developing countries show that SMEs are more constrained in their operations and growth than large enterprises and access to finance features importantly among the constraints, with their proprietors typically perceiving finance as their most pressing input constraints. The problem is more severe in less developed countries like Rwanda. SMEs do not get adequate finance from financial systems despite their valuable contribution in the economic development of all nations across the globe. They are well recognized from their contribution to the socio-economic objectives of growth in employment generation, product output, export, and in their function as seed beds of entrepreneurship. This study aims to investigate the causes of the problem and what could be done to mitigate the problem. The primary objective of the study is to determine how to improve the availability of bank financing to SMEs in Rwanda. The argument is that there are SMEs internal factors that cause unavailability of bank financing. Understanding the causes of this problem is important to determining how to improve availability of credit to SMEs. For this purpose, the questionnaire was administered to 122 respondents from four commercial banks and 26 respondents from one development bank. All together 148 questionnaires were administered and 120 questionnaires returned. The response rate was 81 percent. Six major SMEs internal factors which included; business information, collateral, managerial competency, internal funds, networking and ethical practices were investigated to find out their impact on the availability of bank financing to SMEs. Quantitative data were analysed using a Statistical Package for Social Sciences (SPSS) with statistical tools including descriptive statistics, frequency distributions and chi-square test. The Cronbach’s alpha was used as a measure of reliability. While the data from the open-end question analysis involved classifying data, extracting themes, identifying patterns, tallying and quantifying responses and making generalization out of these patterns. This implies that the research methodology focused on the methods, tools and techniques used to assist in achieving the objectives of the study and answering the research questions that the research sought to address. To this end, the study sought the perceptions of bank staff on reasons why bank credit is not available to SMEs. The study focused on four research questions as outlined in chapter one and other relevant sections of the study. The major finding of this study is that there is a significant positive relationship between six SMEs internal factors (lack of business information, lack of collateral, lack of managerial competency, lack of internal funds, lack of networking and unethical practices) and non-availability of banks finance in Rwanda. On the basis of these findings, the study recommended that SMEs owners and staff should be trained in key strategic areas such as business management and financial management to effectively and efficiently manage their businesses and curb information asymmetry. The study also recommends that the government should introduce more practical guarantee facilities to enable banks access the funds as soon as the SME defaults. This will encourage bank to extend more credit to SMEs. Furthermore, the study suggests that the government should categorise SMEs as a priority sector and come up with a policy requiring banks to compulsorily ensure that a certain earmarked percentage of their overall lending is made to SMEs as a priority sector. Lastly, the study recommends that Rwanda Private Sector Federation should conduct trainings on ethical management to SMEs. Unethical behaviours such as deliberately not paying back loans should be heavily punished to limit occurrences of these behaviours among SMEs which may results in huge stock of non-performing loans.
- Description
- Thesis (PhD) -- Faculty of Management and Commerce, 2012
- Format
- computer
- Format
- online resource
- Format
- application/pdf
- Format
- 1 online resource (208 leaves)
- Format
- Publisher
- University of Fort Hare
- Publisher
- Faculty of Management and Commerce
- Language
- English
- Rights
- University of Fort Hare
- Rights
- All Rights Reserved
- Rights
- Open Access
- Hits: 205
- Visitors: 208
- Downloads: 28
Collections
UFH Department of Economics
| Thumbnail | File | Description | Size | Format | |||
|---|---|---|---|---|---|---|---|
| View Details Download | SOURCE1 | PhD (Mgt & Commerce) GATABAZI, ET.pdf | 1 MB | Adobe Acrobat PDF | View Details Download |