Abstract:
The study provides a comprehensive discussion on credit ration of Small and Medium
Enterprises (SMEs), its effect on the growth of SMEs and subsequent effect on
employment in Ghana. Access to finance has been noted as one of the major challenges
upending the survival and growth of the SMEs sector in Ghana. The problems of access
to finance, gaps and the reasons for the gaps in SMEs financing in Ghana are discussed.
Gaps in SMEs financing were discussed in relation to credit rationing theory which
advocates that agency problems and asymmetric information are the main reasons for
the credit rationing behaviours of credit providers to SMEs. This paper is a study to
identify gaps in literature regarding the financing of SMEs in Ghana using primary data
to gather information. Out of 200 questionnaires administered, 175 were responded to
and used for the study. Descriptive analysis was used to arrive at the major findings in
this thesis. From the study, the findings were that, major factor that influenced loan
application by firms in Ghana were inflation rate and external business environment
while the major factor that influenced credit rationing was lack of securable collateral.
The effect of credit rationing on the growth of SMEs is that credit is needed to expand
business. Therefore, it is recommended that policy recommendations aimed at solving
access to finance challenges and must be empirically tested on a regular basis and
progress in that regard must be constantly monitored and revised to eradicate the
problems.
Description:
A project report in the Department of Accounting Studies Education, Faculty of
Business Students, submitted to the school of Graduate Studies, in partial fulfillment
of the Requirements for award of Master of Business Administration (Finance)
Degree in the University of Education, Winneba
JUNE, 2019