n Ghanaian Journal of Economics - SMEs use of informal credit in Ghana : do business size and sector matter? - research

Volume 7 Number 1
  • ISSN : 2309-8945


This paper examined the effect of business size and sector on SMEs use of informal credit. By employing binary logistic regression analyses on a sample of 900 SMEs, a major finding is that micro and small enterprises have much urge for informal credit compared to medium enterprises. It was also revealed that SMEs in the manufacturing, construction and hospitality sectors relative to agriculture sector are less likely to use informal credit. Furthermore, we find evidence in support of the SME financing life cycle hypothesis. The study concludes that the use of informal credit is not the same for all SMEs; it differs across size and sector of SME.

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