Abstract:
The study provides a comprehensive discussion on Credit Ration of Small and Medium
Enterprises (SME), 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
impeding the survival and growth of the SME sector in Ghana. The problems of access
to finance, gaps and the reasons for the gaps in SME financing in Ghana are
discussed. Gaps in SME 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 behaviors 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 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 were lack of securable collateral.
The effects 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 Dissertation in the Department of Accounting Education, Faculty of Business Studies,
submitted to the School of Graduate Studies, University of Education, Winneba, in
partial fulfilment of the requirements for award of the Master of Business Administration
(Accounting) degree