The Impact of Credit Constraint on Micro and Small Business Enterprises Performance: The Case of Hawassa City Administration, Sidama Region.
No Thumbnail Available
Date
2024-06-13
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
A.A.U
Abstract
Micro- and small-sized enterprises play a critical role in creating job opportunities for millions of young people and attaining Ethiopia's development goals. The study uses a sample survey of 348 operators selected using multistage random sampling procedures to investigate the factors that influence the performance of MSEs in the Hawassa city administration. The cross-tabulated descriptive statistics revealed that personal/managerial characteristics, MSE characteristics, networking, and borrower economic resources all had an impact on MSEs' access to credit. The study investigates the effects of credit on the performance of MSEs in the Hawassa city administration. Propensity score matching was utilized to determine the impact of credit on MSE performance when comparing constraint and unconstrained MSEs. In this setting, it was found that credit had a positive and considerable impact on MSEs yearly average sales growth comparing with constraint MSEs but this finding does not find any significant relationship between the use of credit and employment growth. Hence, it was recommended that collaboration among enterprises, trade associations, and educational institutions should be encouraged. Moreover, enterprises should be able to receive non-financial support services like networking opportunities, business advice, and mentoring.
Keywords: MSE, Impact, Credit, Hawassa, Propensity Score Matching