An assessment of the impact of accounting information system on borrowing cost of SMES in Ghana

Abstract

This study assessed the impact of accounting information system on borrowing cost in Ghana. Specifically, the study explored SMEs motivation for adopting Accounting Information Systems, the factors that influence Loan Officer’s decision to provide credit to SMEs, the relationship between financial reporting benefits of using AIS and SMEs access to credit and the impact of Accounting Information system usage on SMEs Borrowing Cost. The study deployed both mixed research approach where data was collected from the Chief Accountant or finance officers of 7 SMEs who were purposively targeted by the researcher. Also, the study collected data from the Chief Executive Officer (CEO), deputy CEO, loan officers and deputy officers operating in the head offices of the 13 microfinance institutions in the Kumasi Metropolitan Assembly to achieve the other research objectives. The findings of the study revealed that SMEs adopted AIS to improve their decision-making quality from the data reported to managers and also to maintain the quality level of this information. Also, loan officer’s perception of SMEs honesty in terms of financial reporting and competence through the quality of their financial reporting data were revealed to be associated with their decision to extend credit to SMEs or otherwise. Moreover, the results of the study revealed that, AIS usage has a negative and statistically significant relationship with SMEs cost of borrowing. Base on the findings of the study, the researcher recommended that the government through the NBSSI (National Board for Small Scale Industries) and other regulators of SMEs in Ghana in their attempt to sustain businesses and increase employment should put out strategic plans such as providing subsidized loans to SMEs solely for the procurement of AIS to help majority of SMEs in Ghana use AIS so that they can make better decisions and also attract lower cost on their borrowed funds.