Factors Affecting the Use of Lease Financing by Manufacturing Small and Medium Enterprises: the Case of Addis Ababa City Administration

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Using a descriptive as well as an explanatory methodology and a hybrid approach, this study tried to identify and investigate the key influencing aspects that affect the usage of lease finance by manufacturing small to medium-sized firms in Addis Ababa municipal administration. A self administered questionnaire was used to collect primary data, while secondary data was gained through reviewing proclamations, processes, journals, and various relevant literatures. The demography for this study was 1797 manufacturing small and medium-sized enterprises in Addis Ababa City government. The sample size was determined using the Carvalho (1984) method, and a sample of 180 manufacturing SMEs from the Addis Ababa city government was picked using stratified proportional random sampling. A logistic regression model was created using STATA V16, in which the use of lease financing was regressed against enterprise-related variables, institutional framework factors, and leasing information and knowledge variable components. Tables, bar charts, frequencies, and percentages were used to describe the data in line with the study's objectives. The variables under consideration were found using the stepwise regression method and presented as a final model. The study found that business size, firm age, growth opportunities, leasing information, experience, and awareness are all important factors. In contrast, collateral and institutional framework factors have a negative and substantial effect on the lease financing tendency of manufacturing SMEs. As a general rule, the government should intuitively understand and assist leasing systems, as well as small and medium-sized businesses, in freely employing lease financing systems for the country's growth by adopting appealing tax schemes and simple laws and regulations.



lease, Use of lease Financing, Manufacturing SMES, Addis Ababa.