Nexus Between Credit Accessibility and Growth of Small and Medium Enterprises: The Case of Addis Ababa City Administration
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Date
2025-12-05
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AAU
Abstract
This study examines the determinants of small and medium enterprise (SME) performance in
Addis Ababa, Ethiopia, recognizing the critical role of SMEs in economic development and
the persistent challenge of accessing finance in developing nations. Utilizing firm-level data
from the World Bank Enterprise Survey (2015), the research employs a mixed-methods
approach, integrating descriptive statistics and correlation analysis, and a logistic
regression model and ordinary least square model for econometric analysis. The analysis
considers firm characteristics such as size, age, loan access, obstacles to finance, and firm-
level performance measures. Results reveal that firm size (a6a) is a key driver of sales
growth, with larger firms more likely to report positive performance. market orientation (e1)
and rotation order (m1d) also influenced performance (sales growth and employment
growth). The availability of fixed assets did not significantly predict performance, with the
model explaining 40.5% of the variance in performance. The study concludes that easing
financial constraints, expanding SME loan schemes, and strengthening targeted policies for
micro and small enterprises are critical for performance improvement. Policy
recommendations include enhancing financial infrastructure and implementing size-
differentiated support programs