Financing preference of micro, small and medium enterprises in Bolgatanga municipality of the upper east region of Ghana

Abstract

The study investigated the financing preference of MSMEs in the Bolgatanga Municipality, the determinants of this financing behavior of MSMEs. The main objectives set out for the study were to: examine the financing preferences of micro, small and medium enterprises in the Bolgatanga municipality and also, analyze the factors that influence the financing preferences of micro, small and medium enterprises in the Bolgatanga municipality. A sample of 200 respondents was sampled through the simple random sampling technique. A cross-sectional data which was obtained through a structured questionnaire was used. The study used cross-sectional design involving descriptive research. The quantitative method using descriptive, logistics and ordered logistics regressions were used to analyze the data. The analyses showed that firms prefer internal finance over external finance and when external finance is required, firms choose informal finance first before semi-formal and formal finance respectively. It also revealed that gender, location, institutional supports, secondary education, firm’s age (established and matured), firm’s size (medium) and management training influence the firms’ financing preference behavior. The major recommendation was that the government through the NBSSI and GTA should support MSMEs with management training programs to help them operate more formally