Please enter verification code
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
Volume 7, Issue 5, October 2018, Pages: 143-150
Received: Oct. 12, 2018; Accepted: Oct. 29, 2018; Published: Nov. 26, 2018
Views 979      Downloads 366
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
Article Tools
Follow on us
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.
Growth, Small and Medium Enterprises (SMEs), MFIs, Banks, Financial Institutions
To cite this article
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, Journal of Investment and Management. Vol. 7, No. 5, 2018, pp. 143-150. doi: 10.11648/j.jim.20180705.12
Copyright © 2018 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License ( which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Mehreen Mishah; [2014] what is the role of financial institutions in economic development?
Beck et al., [2005, 2006] Financial and legal constraints to firm growth.
Dagva Boldbaatar, (2005) Role of central bank in promoting SME.
Dereje Workie Nigussie, February, [2012] Role of Financial Institutions in the Growth of Small and Medium Enterprises in Addis Ababa.
Haibo Zhouh, Gerrit de Wit, February [2009] Determinants & Dimensions of firm growth; Zoetermecr.
James Milford, [2014] what is the role of financial institutions in economic development?
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.
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].
Amelie Brune, August 21,[2009] An empirical study on the impact of microfinance institutions on development.
Naituli, G., Wegulo, Francis N. &Kaimenyi, B., [2006] Entrepreneurial Human Capital and Growth of Micro and Small Scale Women enterprises in Rural Kenya.
OECD, [2006] Organization for Economic Cooperation & Development; The SME Financing Gap; Theory and Evidence.
Per Davidsson and Magnus Henerksson, [2002] Institutional determinants of the prevalence start ups and high growth firms.
Phillips, B., and B. Kirchhoff, [1989] Formation, growth and survival; Small firm dynamics in the US economy, Small Business Economics 1, 6567.
Pieto calic, Victor M. Chando & Sofian Sekioua, March [2012] Bank Financing to SME in East Africa; Findings of survey in Kenya, Tanzania, Uganda & Zambia.
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.
Robinson O. Owenvbiugie; [2014] Role of finance on the growth of SMEs. In Edo state of Nigeria.
Shiffer & Wede, [2001] Firm size and business Environment; worldwide survey results.
Stiglitz & Weiss, [1981] Credit rationing in markets with imperfect information; American Economic Review.
Storey, D., [1994] Understanding the small business sector, Routledge, New York.
UNDP, June [2012] Entrepreneurship Development Program in Ethiopia; Addis Ababa Ethiopia.
World Bank Report [2005, 2014].
Science Publishing Group
1 Rockefeller Plaza,
10th and 11th Floors,
New York, NY 10020
Tel: (001)347-983-5186