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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
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
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Authors
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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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.
Keywords
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
Copyright © 2018 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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