The Effect of Credit on Job Creation Performance of Micro and Small Enterprises (MSEs) Operating in Addis Ababa
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Date
2020-09
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A.A.U
Abstract
MSEs are considered as the backbone of Ethiopian economy, and have the potential to significantly contribute to job creation and thereby poverty alleviation. The main aim of this study was to examine the effect of access to finance on job creation performance of MSEs. The sources of data for this study includes both primary (survey data) and secondary sources (reports). The study is mainly conducted based on a survey of 206 sample MSEs operating in Addis Ababa. The quantitative data generated through questionnaire surveys were analyzed using both descriptive and inferential statistical techniques through STATA version 20. Ordinary least square regression model was applied to estimate the effect of access to finance (measured by financial leverage) on job creation. The high R squared 85% of the variation in job creation is explained through financial leverage and firm characteristics. The study underlines the substantial role of credit for the job creation performance of MSEs. MSEs' job creation is significantly impacted by financial leverage and firm characteristics of enterprise size and firm age which is in an agreement with other studies. Unlike previous researches, the study couldn't find statistical significance to show the influence of firms economic sector types on job creation. The key findings of the research included availing financial access to MSEs is essential to unleash the potential of MSEs for job creation. The study recommended that policy makers should strive to mobilize more financial resources and put in place regulatory framework for the financial sector that encourage financial institutions to avail more financial access to MSEs, recognizing the role of financial leverage and firm characteristics on job creation performance
Description
A Research Submitted To Addis Ababa University College Of Business And Economics In Partial Fulfillment Of The Requirements For The Degree Of Master Of Business Administration (Mba Finance)
Keywords
Economic development, Microfinance, MSE finance, job creation