University of Oulu

Financing challenges faced by SMEs in Ghana

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Author: Owusu, Enock1
Organizations: 1University of Oulu, Oulu Business School, Department of Accounting, Accounting
Format: ebook
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 1.1 MB)
Pages: 63
Persistent link:
Language: English
Published: Oulu : E. Owusu, 2019
Publish Date: 2019-05-10
Thesis type: Master's thesis
Tutor: Rossi, Anna
Reviewer: Kallunki, Juha-Pekka
Rossi, Anna


The major aim of this study was to explore financing challenges facing SMEs in Ghana. To achieve the aim of the study, four objectives were explored. To investigate lack of access to short term credit as a financing challenge faced by SMEs, to examine Information Asymmetry as an SME financing challenge, to find out the challenge of managerial expertise on SME financing, and to investigate the challenge of transaction costs on SME financing. Transaction cost economic theory, the resource-based view of the firm, and strategic network theory were used to underpin the theoretical reviews.

The study used quantitative data from SMEs in Ghana, and the questionnaires were administered to a sample size of 150 participants, out of which 101 were valid. From the findings, it was clear that demographic and firm characteristics play a role in the ability of SMEs to deal with their Financing Challenges. Majority of the SMEs surveyed had been in existence below six years which is an affirmation of prior researches that these SMEs stand a high risk of liquidation within the first five years of operations. However contrary to prior research that the owners and managers of these enterprises lack a high level of education, the results from my studies indicated that the majority of them have at least a post-secondary education.

Further, the study showed that the major problems facing SMEs financing in Ghana are; access to short term credit, transaction costs and information asymmetry in that order. On the other hand, managerial expertise was not seen as a challenge faced by SMEs in Ghana on their financing.

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