加纳中小企业的银行支持研究外文翻译.docx

加纳中小企业的银行支持研究外文翻译.docx

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加纳中小企业的银行支持研究外文翻译

外文翻译

SmallBusinessRelianceonBankFinancinginGhana

MaterialSource：

EmergingMarketsFinanceandTradeAuthor：

JoshuaAborandNicholasBiekpe

Thereisgrowingrecognitionoftheimportanceofsmallandmedium-sizedenterprises（SMEs）toeconomicdevelopment.Inmanycountries,SMEsmakeupthemajorityofbusinessesandaccountforthehighestproportionofemployment.TheeconomicandsocialcontributionsofSMEssuggestthatitisinthepublicinterestforSMEstothrive（FisherandReuber2000）.However,SMEsoftenhavedifficultyfinancingtheiroperations.Biekpe（2004）arguesthatmostsmallbusinesses,especiallyinsub-SaharanAfrica,failintheirfirstyearduetolackofsupportfromgovernmentandtraditionalbanks.

Priorresearchhasnotedthatbanksareamajorsourceofexternalcapitalforsmallfirms（seeColeandWolken1995;PetersenandRajan1994;Scherretal.1993）.However,smallfirmsfinditmoredifficulttoobtainbankloansthandolargefirms（Orseretal.1994;PetersonandSchulman1987）.Binksetal.（1992）cautionthatsmallbusinesses’restrictedaccesstobankdebtmaynotbedirectlyattributabletotheirsize,butrathertoproblemsassociatedwiththeavailabilityofinformationusedtoevaluateaproject,orinformationasymmetry.Banksgenerallypreferborrowerswithgoodtrackrecordsofprofitability,somedegreeoflongevity,longer-termbankingrelationships,andassetsthatcanbeusedascollateral（BergerandUdell1995;ColeandWolken1995;EnnewandBinks1995;Weinberg1994）,andtheyemploycertainstrategiestominimizetherisksindealingwithpotentialloanborrowers.Toreflectthegreateruncertaintyofrepayment,banksmayraisetheinterestratesonloanstoriskierborrowers,suchassmallbusinesses（BergerandUdell1995）.

PreviousempiricalstudieshavealsoidentifiedadisparitybetweenthedemandforbankcreditbySMEsandthesupplyofbankfundsinGhana.Thishasmainlybeenattributedtocumbersomebankingprocedures,theabsenceofviableandbankableprojects,thelackofcollateral,andhighinterestratesonbankloans（seeAryeetey1998;Bigstenetal.2000;Buatsi2002;Sowaetal.1992）.ThemainfinancialchallengeforSMEsinGhanaisaccesstoaffordablecreditoverareasonableperiod,which,accordingtoTagoeetal.（2005）,isdeterminedbythefinancingneedsofSMEsandtheactionsofinvestors.Tagoeetal.（2005）suggestthatSMEfinancingneedsreflecttheiroperationalrequirements,whereasinvestors’actionsdependontheirriskperceptionandtheattractivenessofalternativeinvestments,whichaffectstheirwillingnesstoinvest.Previousstudies,however,focusedmainlyontheproblemsSMEsfaceinaccessingbankloansgenerally.WhatdeterminesSMEs’accesstobankfinanceinGhanainparticularremainsunexplored.ThispaperexaminesthedeterminantsofbankfinancingofSMEsinGhanabyemployingapanelregressionmodel.

Methodology

ThisstudyexploresthedeterminantsofbankfinancingofGhanaianSMEsbyemployingfirm-levelcharacteristicsidentifiedinpreviousempiricalstudiesexaminingthefinancialstructureofSMEs.Thecharacteristicsincludetheageandsizeofthefirm,assettangibility,profitability,andfirmgrowth.Thisstudyalsoincludesmacroeconomicvariables—inflationandinterestrates—asdeterminantsofbankfinance.

SampleandVariables

Empiricalanalysisisbasedonasampleof105SMEs,drawnfromdatabasesof

firmsfromtheAssociationofGhanaianIndustriesandtheNationalBoardforSmall-ScaleIndustries.ThesampleselectionwasbasedonthecriteriasetbytheRegionalProjectonEnterpriseDevelopmentforSMEsinGhana,meaningthatfirmswithlessthan100employeeswereincludedinthestudysample.Thedatawerederivedfromthefirmsduringasix-yearperiod,1998to2003.ThisstudyfocusedonSMEsthathadbankloansintheirbalancesheetsduringthatperiod.Thedependentvariableusedtomeasurebankfinancingisthebank-debtratio,ortheproportionofthetotaldebtobtainedfrombanks,andisdefinedastheratioofbankdebttotaldebt.ThismeasurestheroleofbankfinancingintheSMEsector.

Firmageisincludedinthemodeltoproxyreputation.Itisbelievedthatasafirmstaysinbusiness,itestablishesitselfasacontinuingbusinessandthereforeincreasesitscapacitytotakeonmoredebt;hence,ageispositivelyrelatedtodebt.Beforegrantingaloan,bankstendtoevaluatethecreditworthinessofentrepreneurs,whoaregenerallybelievedtopinhighhopesonveryriskyprojectsthatpromisehighprofitabilityrates.Toovercomeproblemsinevaluatingcreditworthiness,Diamond（1989）suggestsusingfirmreputation—thegoodnameafirmhasbuiltupovertheyearsthatisunderstoodbythemarket,whichhasobservedthefirm’sability

tomeetitsobligationsinatimelymanner.Rajan（1992）andPetersenandRajan（1994）,amongothers,arguethatalonglendingorbankingrelationshipreducestheseverityofinformationalasymmetriesforbanksbyinformingthemabouttheborrower’scredithistoryandaccountmovements,aswellasthepersonalbehaviorofthefirm’smanager.Timmons（1994）observesthatcapitalrequirementsaredifferentatdifferentstagesoffirmgrowth.Youngfirmsmaybeabletodrawcapitalfrominternalsources,suchasearnings,andinformalsources,suchasfamilyandfriends.Asasuccessfulfirmgrows,however,morecapitalisrequiredtofinance

growth,andatsomepoint,thefirmmustturntoexternalsources,suchasbanks.Consequently,theexpectedsignispositive.

Firmsize,whichthemodelmeasuresasthelogarithmoftotalassets,representseitherthelargenessorsmallnessofthefirm.Thelargerthefirm,thelowertheprobabilityofdefault,whichinturnisrelatedtogreaterdiversification,availabilityofcollateral,orcommercialsuccess.Itsexpectedeffectontheprobabilityofobtainingcreditispositive.Smallerfirms,ontheotherhand,mayfinditrelativelymorecostlytoresolveinformationasymmetrieswithlenders,andthusmaypresentlowerdebtratios.Smallerenterpriseshavegreaterproblemswithbankcreditthandolargerfirmsbecausethesuccessrateforlargefirmsapplyingforbankloans,forinstance,ishigherthanthatofsmallerfirms（Aryeeteyetal.1994）.Firmsizeispredictedtoberelatedpositivelytothebank-debtratioofSMEs.Diamond（1991）andOoi（2000）,however,findinthecaseoflargefirmsthatthesizeofthefirmisrelatednegativelytothebank-debtratio.

Assettangibilityisoperationalizedasthetangiblefixedassetsofthefirmdividedbythefirm’stotalassets.TheratiooftangiblefixedassetstototalassetsisseenbyCassarandHolmes（2003）asanappropriatemeasureofassetstructureandcollateralvalue.ItissuggestedthatSMEs’accesstobankfinancing,especiallylong-termloans,dependsuponwhetherthelendingcanbesecuredbytangibleassets（Angetal.1995;Augustetal.1997;BergerandUdell1995,1998;Bootetal.1991;Storey1994）.SMEsthatinvestheavilyintangiblefixedassetstendtohavehigherbank-debtratios,astangiblefixedassetscanbeusedascollateral,reducingthebank’spotentiallossesforagiveninterestrateanddiscouragingmoral-hazardbehavior.Itisthereforehypothesizedthatthereisapositiverelationbetweenassettangibilityandbank-debtratio.

Profitablefirmshavelowbankruptcyriskandthereforecanattractmorebankloans（Storey1994）.Profitabilityismeasuredasearningsbeforeinterestandtaxes,dividedbytotalassets.AccordingtoOoi（1999）,profitablefirmsthataremoreattractivetofinancialinstitutionsaslendingprospectsarelikelytoattractmoreexternaldebtcapital.Thehigherafirm’sprofitability,thelowertheprobabilityofdefault,andthehighertheprobabilityofsuccessfullyobtainingabankloan.ThissuggeststhathighlyprofitableSMEscaneasilyaccessmorebankfinance.Wethereforeexpectapositiverelationbetweenprofitabilityandthebank-debtratio.

Growthismeasuredbydiversificationthroughexports.SMEsinvolvedinexportareseentobemorediversified,andassuch,canaccommodategreaterdebtcapital（Abor2004）.Afirm’sexportperformancemayconveyvaluableinformationtoabank:

First,itrevealsthedegreeofcompetitivenessinusuallyaggressivemarkets,andsecond,itindicatesproductivediversificationagainstdomesticshocks.Theprobabilityofdefaultislikelytobelowerforexport-orientedfirms,providedthebanktrustsorconfirmsthefirm’sexpectations.Itismeasuredthroughadummyvariable,takingthevalue1ifthefirmexportsand0otherwise.Apositiverelationisexpected.

Themacroeconomicvariables—theinflationandinterestrates—areexpectedtohavenegativerelationswithbankfinance,asSMEsarediscouragedfromtakingoutloansfrombanksathigherinterestrates.Duringinflationaryperiods,banksincreasetheirlendingratestocovertheircosts.Also,bankspreferinvestingtheirresourcesingovernmentsecuritiesratherthanlendingtoriskySMEs.

TheModel

ThisstudyadoptsthemodelusedbyOoi（2000）,modifyingitwherenecessary.Thenewmodelconsiderstherelationbetweenthebank-debtratioandageandsizeofthefirm,assettangibility,profitability,andgrowth.Itincludestheinflationandinterestratesasmacroeconomicvariables,asusedinstandardfinancial-structureliterature（seeDemirgüc-KuntandMaksimovic1999）.Themodelfortheempiricalinvestigationtakesthefollowingform:

yit=αXit+βMit+ηi+λt+υit,

（1）

whereyitrepresentsthebank-debtratio—thatis,theratioofbankdebttototaldebtforfirmiintimet;Xitisavectoroffirm-levelcharacteristics,suchastheageandsizeofthefirm,assettangibility,profitability,andgrowth;Mitis