Role of Financial Institution on the Growth of Small and Medium Enterprises:-The Case in North Shewa Zone, Amhara Region, Ethiopia

Alebachew Goshim Azeref; Yohanes Tefera Gelagil

doi:doi:10.11648/j.jim.20180705.12

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Role of Financial Institution on the Growth of Small and Medium Enterprises:-The Case in North Shewa Zone, Amhara Region, Ethiopia

Alebachew Goshim Azeref, Yohanes Tefera Gelagil

Published in Journal of Investment and Management (Volume 7, Issue 5)

Received: 12 October 2018 Accepted: 29 October 2018 Published: 26 November 2018

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Abstract

The objective of this study was to investigate the role of financial institutions on the growth of small and medium enterprises and to give recommendations based on the problems. Despite the tremendous increase in number of SMEs, little research exists that examines role of financial institutions; banks and microfinance institutions; on the growth of small and medium enterprises in developing countries, especially in Ethiopia specifically in north shewa zone of Amhara region. SMEs occupy a prominent position in the development agenda of many developing countries like us. Primary data were collected from 102SMEs in north shewa zone. Data from the respondents was tabulated for descriptive purpose and analyzed and translated into useful information using the statistical package for social sciences (SPSS). Therefore the study identifies size of loan, lower borrowing cost and saving account has positive relationship with growth of small and medium enterprise and the influence of these variables was significant. On the other hand there was positive relationship between duration of loan, simplicity of criteria, follow up & supervision and growth of SMEs. But the influence is relatively insignificance. The study recommends that the government and financial intuitions to make credit available and affordable to SMEs reducing the traditional barriers to SMEs financing, make financial intuitions products & services without unattainable criteria and at lower borrowing cost, setup mechanisms of training for SMEs before and after the loan. The study also recommends that make saving account easily accessible facilitated with technology for their growth.

Published in	Journal of Investment and Management (Volume 7, Issue 5)
DOI	10.11648/j.jim.20180705.12
Page(s)	143-150
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2018. Published by Science Publishing Group

Keywords

Growth, Small and Medium Enterprises (SMEs), MFIs, Banks, Financial Institutions

References

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[2]	Beck et al., [2005, 2006] Financial and legal constraints to firm growth.
[3]	Dagva Boldbaatar, (2005) Role of central bank in promoting SME.
[4]	Dereje Workie Nigussie, February, [2012] Role of Financial Institutions in the Growth of Small and Medium Enterprises in Addis Ababa.
[5]	Haibo Zhouh, Gerrit de Wit, February [2009] Determinants & Dimensions of firm growth; Zoetermecr.
[6]	James Milford, [2014] what is the role of financial institutions in economic development?
[7]	James Wambua Nganda, Kadian W. Wanyonyi and Elizabeth M. Kitili, 21 January [2014] Determinants of growth of small and medium enterprises in Kakamega central sub-county, Kenya, University of Nairobi, Kenya.
[8]	Kepha Momany, Osoro Jomo, [2013] The role of Micro Finance Institution on the growth of SMEs in Kenya; a case study of MFIs in Kisi Town; IOSR Journal of Humanities and social science[IOSR-JHSS-pp 83-93].
[9]	Amelie Brune, August 21,[2009] An empirical study on the impact of microfinance institutions on development.
[10]	Naituli, G., Wegulo, Francis N. &Kaimenyi, B., [2006] Entrepreneurial Human Capital and Growth of Micro and Small Scale Women enterprises in Rural Kenya.
[11]	OECD, [2006] Organization for Economic Cooperation & Development; The SME Financing Gap; Theory and Evidence.
[12]	Per Davidsson and Magnus Henerksson, [2002] Institutional determinants of the prevalence start ups and high growth firms.
[13]	Phillips, B., and B. Kirchhoff, [1989] Formation, growth and survival; Small firm dynamics in the US economy, Small Business Economics 1, 6567.
[14]	Pieto calic, Victor M. Chando & Sofian Sekioua, March [2012] Bank Financing to SME in East Africa; Findings of survey in Kenya, Tanzania, Uganda & Zambia.
[15]	Radwan, A., [2009] An evaluation of the challenges and prospects of micro and small scale enterprises development in Nigeria. American international journal of contemporary research, 2, 4, 174-185.
[16]	Robinson O. Owenvbiugie; [2014] Role of finance on the growth of SMEs. In Edo state of Nigeria.
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[19]	Storey, D., [1994] Understanding the small business sector, Routledge, New York.
[20]	UNDP, June [2012] Entrepreneurship Development Program in Ethiopia; Addis Ababa Ethiopia.
[21]	World Bank Report [2005, 2014].

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APA Style

Alebachew Goshim Azeref, Yohanes Tefera Gelagil. (2018). Role of Financial Institution on the Growth of Small and Medium Enterprises:-The Case in North Shewa Zone, Amhara Region, Ethiopia. Journal of Investment and Management, 7(5), 143-150. https://doi.org/10.11648/j.jim.20180705.12

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ACS Style

Alebachew Goshim Azeref; Yohanes Tefera Gelagil. Role of Financial Institution on the Growth of Small and Medium Enterprises:-The Case in North Shewa Zone, Amhara Region, Ethiopia. J. Invest. Manag. 2018, 7(5), 143-150. doi: 10.11648/j.jim.20180705.12

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AMA Style

Alebachew Goshim Azeref, Yohanes Tefera Gelagil. Role of Financial Institution on the Growth of Small and Medium Enterprises:-The Case in North Shewa Zone, Amhara Region, Ethiopia. J Invest Manag. 2018;7(5):143-150. doi: 10.11648/j.jim.20180705.12

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@article{10.11648/j.jim.20180705.12,
  author = {Alebachew Goshim Azeref and Yohanes Tefera Gelagil},
  title = {Role of Financial Institution on the Growth of Small and Medium Enterprises:-The Case in North Shewa Zone, Amhara Region, Ethiopia},
  journal = {Journal of Investment and Management},
  volume = {7},
  number = {5},
  pages = {143-150},
  doi = {10.11648/j.jim.20180705.12},
  url = {https://doi.org/10.11648/j.jim.20180705.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20180705.12},
  abstract = {The objective of this study was to investigate the role of financial institutions on the growth of small and medium enterprises and to give recommendations based on the problems. Despite the tremendous increase in number of SMEs, little research exists that examines role of financial institutions; banks and microfinance institutions; on the growth of small and medium enterprises in developing countries, especially in Ethiopia specifically in north shewa zone of Amhara region. SMEs occupy a prominent position in the development agenda of many developing countries like us. Primary data were collected from 102SMEs in north shewa zone. Data from the respondents was tabulated for descriptive purpose and analyzed and translated into useful information using the statistical package for social sciences (SPSS). Therefore the study identifies size of loan, lower borrowing cost and saving account has positive relationship with growth of small and medium enterprise and the influence of these variables was significant. On the other hand there was positive relationship between duration of loan, simplicity of criteria, follow up & supervision and growth of SMEs. But the influence is relatively insignificance. The study recommends that the government and financial intuitions to make credit available and affordable to SMEs reducing the traditional barriers to SMEs financing, make financial intuitions products & services without unattainable criteria and at lower borrowing cost, setup mechanisms of training for SMEs before and after the loan. The study also recommends that make saving account easily accessible facilitated with technology for their growth.},
 year = {2018}
}

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TY  - JOUR
T1  - Role of Financial Institution on the Growth of Small and Medium Enterprises:-The Case in North Shewa Zone, Amhara Region, Ethiopia
AU  - Alebachew Goshim Azeref
AU  - Yohanes Tefera Gelagil
Y1  - 2018/11/26
PY  - 2018
N1  - https://doi.org/10.11648/j.jim.20180705.12
DO  - 10.11648/j.jim.20180705.12
T2  - Journal of Investment and Management
JF  - Journal of Investment and Management
JO  - Journal of Investment and Management
SP  - 143
EP  - 150
PB  - Science Publishing Group
SN  - 2328-7721
UR  - https://doi.org/10.11648/j.jim.20180705.12
AB  - The objective of this study was to investigate the role of financial institutions on the growth of small and medium enterprises and to give recommendations based on the problems. Despite the tremendous increase in number of SMEs, little research exists that examines role of financial institutions; banks and microfinance institutions; on the growth of small and medium enterprises in developing countries, especially in Ethiopia specifically in north shewa zone of Amhara region. SMEs occupy a prominent position in the development agenda of many developing countries like us. Primary data were collected from 102SMEs in north shewa zone. Data from the respondents was tabulated for descriptive purpose and analyzed and translated into useful information using the statistical package for social sciences (SPSS). Therefore the study identifies size of loan, lower borrowing cost and saving account has positive relationship with growth of small and medium enterprise and the influence of these variables was significant. On the other hand there was positive relationship between duration of loan, simplicity of criteria, follow up & supervision and growth of SMEs. But the influence is relatively insignificance. The study recommends that the government and financial intuitions to make credit available and affordable to SMEs reducing the traditional barriers to SMEs financing, make financial intuitions products & services without unattainable criteria and at lower borrowing cost, setup mechanisms of training for SMEs before and after the loan. The study also recommends that make saving account easily accessible facilitated with technology for their growth.
VL  - 7
IS  - 5
ER  -

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Author Information

Alebachew Goshim Azeref

Department of Accounting and Finance, Debre Birehan University, Debre Birehan, Ethiopia
Yohanes Tefera Gelagil

Department of Logistics and Supply Chain Management, Debre Birehan University, Debre Birehan, Ethiopia

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APA Style

Alebachew Goshim Azeref, Yohanes Tefera Gelagil. (2018). Role of Financial Institution on the Growth of Small and Medium Enterprises:-The Case in North Shewa Zone, Amhara Region, Ethiopia. Journal of Investment and Management, 7(5), 143-150. https://doi.org/10.11648/j.jim.20180705.12

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ACS Style

Alebachew Goshim Azeref; Yohanes Tefera Gelagil. Role of Financial Institution on the Growth of Small and Medium Enterprises:-The Case in North Shewa Zone, Amhara Region, Ethiopia. J. Invest. Manag. 2018, 7(5), 143-150. doi: 10.11648/j.jim.20180705.12

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AMA Style

Alebachew Goshim Azeref, Yohanes Tefera Gelagil. Role of Financial Institution on the Growth of Small and Medium Enterprises:-The Case in North Shewa Zone, Amhara Region, Ethiopia. J Invest Manag. 2018;7(5):143-150. doi: 10.11648/j.jim.20180705.12

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@article{10.11648/j.jim.20180705.12,
  author = {Alebachew Goshim Azeref and Yohanes Tefera Gelagil},
  title = {Role of Financial Institution on the Growth of Small and Medium Enterprises:-The Case in North Shewa Zone, Amhara Region, Ethiopia},
  journal = {Journal of Investment and Management},
  volume = {7},
  number = {5},
  pages = {143-150},
  doi = {10.11648/j.jim.20180705.12},
  url = {https://doi.org/10.11648/j.jim.20180705.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20180705.12},
  abstract = {The objective of this study was to investigate the role of financial institutions on the growth of small and medium enterprises and to give recommendations based on the problems. Despite the tremendous increase in number of SMEs, little research exists that examines role of financial institutions; banks and microfinance institutions; on the growth of small and medium enterprises in developing countries, especially in Ethiopia specifically in north shewa zone of Amhara region. SMEs occupy a prominent position in the development agenda of many developing countries like us. Primary data were collected from 102SMEs in north shewa zone. Data from the respondents was tabulated for descriptive purpose and analyzed and translated into useful information using the statistical package for social sciences (SPSS). Therefore the study identifies size of loan, lower borrowing cost and saving account has positive relationship with growth of small and medium enterprise and the influence of these variables was significant. On the other hand there was positive relationship between duration of loan, simplicity of criteria, follow up & supervision and growth of SMEs. But the influence is relatively insignificance. The study recommends that the government and financial intuitions to make credit available and affordable to SMEs reducing the traditional barriers to SMEs financing, make financial intuitions products & services without unattainable criteria and at lower borrowing cost, setup mechanisms of training for SMEs before and after the loan. The study also recommends that make saving account easily accessible facilitated with technology for their growth.},
 year = {2018}
}

Copy | Download

TY  - JOUR
T1  - Role of Financial Institution on the Growth of Small and Medium Enterprises:-The Case in North Shewa Zone, Amhara Region, Ethiopia
AU  - Alebachew Goshim Azeref
AU  - Yohanes Tefera Gelagil
Y1  - 2018/11/26
PY  - 2018
N1  - https://doi.org/10.11648/j.jim.20180705.12
DO  - 10.11648/j.jim.20180705.12
T2  - Journal of Investment and Management
JF  - Journal of Investment and Management
JO  - Journal of Investment and Management
SP  - 143
EP  - 150
PB  - Science Publishing Group
SN  - 2328-7721
UR  - https://doi.org/10.11648/j.jim.20180705.12
AB  - The objective of this study was to investigate the role of financial institutions on the growth of small and medium enterprises and to give recommendations based on the problems. Despite the tremendous increase in number of SMEs, little research exists that examines role of financial institutions; banks and microfinance institutions; on the growth of small and medium enterprises in developing countries, especially in Ethiopia specifically in north shewa zone of Amhara region. SMEs occupy a prominent position in the development agenda of many developing countries like us. Primary data were collected from 102SMEs in north shewa zone. Data from the respondents was tabulated for descriptive purpose and analyzed and translated into useful information using the statistical package for social sciences (SPSS). Therefore the study identifies size of loan, lower borrowing cost and saving account has positive relationship with growth of small and medium enterprise and the influence of these variables was significant. On the other hand there was positive relationship between duration of loan, simplicity of criteria, follow up & supervision and growth of SMEs. But the influence is relatively insignificance. The study recommends that the government and financial intuitions to make credit available and affordable to SMEs reducing the traditional barriers to SMEs financing, make financial intuitions products & services without unattainable criteria and at lower borrowing cost, setup mechanisms of training for SMEs before and after the loan. The study also recommends that make saving account easily accessible facilitated with technology for their growth.
VL  - 7
IS  - 5
ER  -

Copy | Download