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Small business finance in Sub‐Saharan Africa: the case of Ghana

Author

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  • Charles Amo Yartey

Abstract

Purpose - This paper aims to examine how unlisted companies in Ghana finance their growth and to what extent do they rely on internal finance relative to external sources of finance. Additionally, the paper seeks to investigate the determinants of the capital structure of unlisted companies in Ghana. Design/methodology/approach - The paper uses the Singh‐Hamid methodology as well as panel data techniques to evaluate the financing decisions of unlisted companies in Ghana. Findings - The analysis shows that unlisted firms in Ghana finance most of their growth from external debt and they are also characterized by shorter debt maturity. The results also show that the dominant factors affecting the debt equity ratios of unlisted firms in Ghana are size, firm growth, tangibility, profit margin, and financial development. Research limitations/implications - Overall, the evidence in this paper suggests that standard models of corporate finance can be applicable to unlisted companies in Ghana. Practical implications - Informative when planning for future development of the small business sector of the Ghanaian economy. Originality/value - Provides empirical evidence on how unlisted companies in Ghana finance their growth and what determines their capital structure.

Suggested Citation

  • Charles Amo Yartey, 2011. "Small business finance in Sub‐Saharan Africa: the case of Ghana," Management Research Review, Emerald Group Publishing Limited, vol. 34(2), pages 172-185, January.
    • Handle: RePEc:eme:mrrpps:v:34:y:2011:i:2:p:172-185
    DOI: 10.1108/01409171111102795
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    Citations

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    Cited by:

    1. Sushma Verma & Samik Shome & Aakruti Patel, 2024. "Exploring the Effects of Firm-Specific Factors on Financing Preferences of Listed SMEs in India," Business Perspectives and Research, , vol. 12(1), pages 149-163, January.
    2. Edson Vengesai & Farai Kwenda, 2018. "Cash Flow Volatility and Firm Investment Behaviour: Evidence from African Listed Firms," Journal of Economics and Behavioral Studies, AMH International, vol. 10(6), pages 129-149.
    3. Majumdar, Raju, 2012. "The Determinants of Indebtedness in Unlisted Manufacturing Firms in India: A Panel Data Analysis," MPRA Paper 43427, University Library of Munich, Germany.
    4. Amon Simba & Mahdi Tajeddin & Léo-Paul Dana & Domingo E. Ribeiro Soriano, 2024. "Deconstructing involuntary financial exclusion: a focus on African SMEs," Small Business Economics, Springer, vol. 62(1), pages 285-305, January.
    5. Beata Ślusarczyk & Katarzyna Grondys, 2019. "Parametric Conditions of High Financial Risk in the SME Sector," Risks, MDPI, vol. 7(3), pages 1-17, August.
    6. Bojana Vukovic & Suncica Milutinovic & Nikola Milicevic & Dejan Jaksic, 2020. "The Analysis of Indebtedness of Retail Companies in the Balkan Countries," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 83-104.

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