Small Enterprise Finance under Liberalization in Ghana
This study investigates the apparent contradiction between the high propensity of small- and medium-sized enterprises (SMEs) to identify finance as their primary constraint and the view of banks that SME lending remains low in part for lack of bank...
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| Format: | Brief |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/1994/11/1614983/small-enterprise-finance-under-liberalization-ghana http://hdl.handle.net/10986/10007 |
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okr-10986-100072021-04-23T14:02:48Z Small Enterprise Finance under Liberalization in Ghana Aryeetey, Ernest Baah-Nuakoh, Amoah Duggleby, Tamara Hettige, Hemamala Steel, William F. BANK ACCOUNTS BANK OFFICERS BANK PORTFOLIOS BANKING LAWS BANKING SYSTEM BANKS BORROWING CAPITAL BASE CAPITAL LOANS DECENTRALIZATION DEPOSITS DEVELOPMENT BANKS ECONOMIC POLICIES EMPLOYMENT ENTERPRISE DEVELOPMENT ENTERPRISE FINANCE ENTREPRENEURS ERP EXCESS DEMAND EXPANSION FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL POLICIES FIRM SIZE GUARANTORS INTEREST RATES LARGE ENTERPRISES LENDERS LIBERALIZATION OF FINANCIAL MARKETS LIQUIDITY MICROENTERPRISES MONETARY POLICIES PERSONAL SAVINGS PRIVATE ENTERPRISES PRIVATE SAVINGS PRODUCTIVITY RETAINED EARNINGS SAVINGS SCALE ENTERPRISES SMALL BANKS SMALL BUSINESS SMALL ENTERPRISES SMALL FIRMS SME SME LENDING TECHNICAL ASSISTANCE WORKING CAPITAL SMALL ENTERPRISES SMALL & MEDIUM SCALE ENTERPRISES FINANCE BANKING SYSTEMS SURVEYS FINANCIAL INSTITUTIONS INVESTMENTS BANK CREDIT ACCESS TO CREDIT EXTERNAL FINANCE INTEREST RATES INVESTMENT RISKS EQUITY FINANCE CAPITAL INVESTMENTS SUPPLIERS' CREDITS WORKING CAPITAL CASH CONTRIBUTIONS MICROENTERPRISES COLLATERAL LOAN PROCESSING SYSTEMS INSTITUTIONAL FRAMEWORK PORTFOLIO PERFORMANCE TRANSACTION COSTS This study investigates the apparent contradiction between the high propensity of small- and medium-sized enterprises (SMEs) to identify finance as their primary constraint and the view of banks that SME lending remains low in part for lack of bankable demand. Surveys were conducted of relatively successful microenterprises and SMEs to assess demand and sources of finance, and formal and informal financial institutions were interviewed to analyze constraints on the supply side. The survey results show that credit for start-up is rare and that the smaller the enterprise, the greater the equity finance share of the initial investment. Many SMEs achieve substantial growth through reinvestment of profits, making it difficult to conclude that entry and growth of SMEs depends crucially on loans. Other forms of finance, such as customers' advances and supplier's credit are at least as important as bank credit. Nevertheless, the evidence suggests that exploitation of highly profitable opportunities by SMEs could be accelerated if they had greater access to external financing. Tight money, banks' efforts to improve portfolio performance, centralization of decision-making, and lack of competition explain why banks have shown little interest in developing SMEs as a market niche. The study suggests techniques that banks could adopt to overcome the problems of high transaction costs and risks in SME lending, drawing on the methods of informal financial agents. 2012-08-13T10:07:15Z 2012-08-13T10:07:15Z 1994-11 http://documents.worldbank.org/curated/en/1994/11/1614983/small-enterprise-finance-under-liberalization-ghana http://hdl.handle.net/10986/10007 English Africa Region Findings & Good Practice Infobriefs; No. 26 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Brief Publications & Research Africa Ghana |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
BANK ACCOUNTS BANK OFFICERS BANK PORTFOLIOS BANKING LAWS BANKING SYSTEM BANKS BORROWING CAPITAL BASE CAPITAL LOANS DECENTRALIZATION DEPOSITS DEVELOPMENT BANKS ECONOMIC POLICIES EMPLOYMENT ENTERPRISE DEVELOPMENT ENTERPRISE FINANCE ENTREPRENEURS ERP EXCESS DEMAND EXPANSION FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL POLICIES FIRM SIZE GUARANTORS INTEREST RATES LARGE ENTERPRISES LENDERS LIBERALIZATION OF FINANCIAL MARKETS LIQUIDITY MICROENTERPRISES MONETARY POLICIES PERSONAL SAVINGS PRIVATE ENTERPRISES PRIVATE SAVINGS PRODUCTIVITY RETAINED EARNINGS SAVINGS SCALE ENTERPRISES SMALL BANKS SMALL BUSINESS SMALL ENTERPRISES SMALL FIRMS SME SME LENDING TECHNICAL ASSISTANCE WORKING CAPITAL SMALL ENTERPRISES SMALL & MEDIUM SCALE ENTERPRISES FINANCE BANKING SYSTEMS SURVEYS FINANCIAL INSTITUTIONS INVESTMENTS BANK CREDIT ACCESS TO CREDIT EXTERNAL FINANCE INTEREST RATES INVESTMENT RISKS EQUITY FINANCE CAPITAL INVESTMENTS SUPPLIERS' CREDITS WORKING CAPITAL CASH CONTRIBUTIONS MICROENTERPRISES COLLATERAL LOAN PROCESSING SYSTEMS INSTITUTIONAL FRAMEWORK PORTFOLIO PERFORMANCE TRANSACTION COSTS |
| spellingShingle |
BANK ACCOUNTS BANK OFFICERS BANK PORTFOLIOS BANKING LAWS BANKING SYSTEM BANKS BORROWING CAPITAL BASE CAPITAL LOANS DECENTRALIZATION DEPOSITS DEVELOPMENT BANKS ECONOMIC POLICIES EMPLOYMENT ENTERPRISE DEVELOPMENT ENTERPRISE FINANCE ENTREPRENEURS ERP EXCESS DEMAND EXPANSION FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL POLICIES FIRM SIZE GUARANTORS INTEREST RATES LARGE ENTERPRISES LENDERS LIBERALIZATION OF FINANCIAL MARKETS LIQUIDITY MICROENTERPRISES MONETARY POLICIES PERSONAL SAVINGS PRIVATE ENTERPRISES PRIVATE SAVINGS PRODUCTIVITY RETAINED EARNINGS SAVINGS SCALE ENTERPRISES SMALL BANKS SMALL BUSINESS SMALL ENTERPRISES SMALL FIRMS SME SME LENDING TECHNICAL ASSISTANCE WORKING CAPITAL SMALL ENTERPRISES SMALL & MEDIUM SCALE ENTERPRISES FINANCE BANKING SYSTEMS SURVEYS FINANCIAL INSTITUTIONS INVESTMENTS BANK CREDIT ACCESS TO CREDIT EXTERNAL FINANCE INTEREST RATES INVESTMENT RISKS EQUITY FINANCE CAPITAL INVESTMENTS SUPPLIERS' CREDITS WORKING CAPITAL CASH CONTRIBUTIONS MICROENTERPRISES COLLATERAL LOAN PROCESSING SYSTEMS INSTITUTIONAL FRAMEWORK PORTFOLIO PERFORMANCE TRANSACTION COSTS Aryeetey, Ernest Baah-Nuakoh, Amoah Duggleby, Tamara Hettige, Hemamala Steel, William F. Small Enterprise Finance under Liberalization in Ghana |
| geographic_facet |
Africa Ghana |
| relation |
Africa Region Findings & Good Practice Infobriefs; No. 26 |
| description |
This study investigates the apparent
contradiction between the high propensity of small- and
medium-sized enterprises (SMEs) to identify finance as their
primary constraint and the view of banks that SME lending
remains low in part for lack of bankable demand. Surveys
were conducted of relatively successful microenterprises and
SMEs to assess demand and sources of finance, and formal and
informal financial institutions were interviewed to analyze
constraints on the supply side. The survey results show that
credit for start-up is rare and that the smaller the
enterprise, the greater the equity finance share of the
initial investment. Many SMEs achieve substantial growth
through reinvestment of profits, making it difficult to
conclude that entry and growth of SMEs depends crucially on
loans. Other forms of finance, such as customers'
advances and supplier's credit are at least as
important as bank credit. Nevertheless, the evidence
suggests that exploitation of highly profitable
opportunities by SMEs could be accelerated if they had
greater access to external financing. Tight money,
banks' efforts to improve portfolio performance,
centralization of decision-making, and lack of competition
explain why banks have shown little interest in developing
SMEs as a market niche. The study suggests techniques that
banks could adopt to overcome the problems of high
transaction costs and risks in SME lending, drawing on the
methods of informal financial agents. |
| format |
Publications & Research :: Brief |
| author |
Aryeetey, Ernest Baah-Nuakoh, Amoah Duggleby, Tamara Hettige, Hemamala Steel, William F. |
| author_facet |
Aryeetey, Ernest Baah-Nuakoh, Amoah Duggleby, Tamara Hettige, Hemamala Steel, William F. |
| author_sort |
Aryeetey, Ernest |
| title |
Small Enterprise Finance under Liberalization in Ghana |
| title_short |
Small Enterprise Finance under Liberalization in Ghana |
| title_full |
Small Enterprise Finance under Liberalization in Ghana |
| title_fullStr |
Small Enterprise Finance under Liberalization in Ghana |
| title_full_unstemmed |
Small Enterprise Finance under Liberalization in Ghana |
| title_sort |
small enterprise finance under liberalization in ghana |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/1994/11/1614983/small-enterprise-finance-under-liberalization-ghana http://hdl.handle.net/10986/10007 |
| _version_ |
1764411464186068992 |