An Investigation of Small and Micro-Enterprise Owners' Perceptions Towards Financial Credit Offered by Commercial Banks in the Cape Coast Metropolitan Area of Ghana

This paper reports on a study conducted by collecting data from both the demand and supply sides of formal finance to understand the perceptions of each party towards the other, regarding financial credit offered by commercial banks in the Cape Coast Metropolitan Area of Ghana. The study is an empirical investigation of perceptions and attitudes respectively of the two parties and consequently the co-existence expected of them – the commercial banks, as an important source of business funding and the small and micro-enterprise owners (SMEOs), as valued customers. Findings of the study point to the fact that SMEOs, especially the unregistered ones have a very blinkered understanding of the banks‟ financial credit procedures. The consequence of which, is the perceived rigid prudential measures by banks, weak locus of loan/overdraft applications and bargaining power in terms of credit quantum, interest rates and their resultant payment defaults. The banks on the other hand, would be required to do much more in terms of education on their products and procedures. In addition, their loan-repayment patterns and interest rates were found to be rigid and indiscriminate respectively and as a result, had made them unattractive to the SMEOs. The study recommends the importance of building a healthy business partnership between the two parties as a means to improve access to finance by this SME sector.