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Perceived Risk and External Finance Usage in Small- and Medium-Sized Enterprises: Unveiling the Moderating Influence of Business Age

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  • Nawal Abdalla Adam

    (College of Business Administration, Princess Nourah bint Abdulrahman University, Riyadh 11671, Saudi Arabia)

Abstract

The attainment of adequate finance remains a substantial hindrance for small- and medium-sized enterprises (SMEs) across many countries. This study aim to investigate the association between SMEs’ external finance utilization and perceived risk (PR). Additionally, it intends to explore the moderating role of business age (BAge) in the relationship between SMEs’ external finance utilization and PR. The study employed a structured online questionnaire to gather data from 711 SME owners/managers in Saudi Arabia. SmartPLS 4 software was utilized to analyze the research data. The results of the partial least squares structural equation modeling confirmed that the decision of SMEs to use external financing is significantly and negatively impacted by the PRs associated with external finance. Furthermore, BAge moderates the relationship between PR and SMEs’ external finance usage (EFU). However, the study found that BAge does not significantly affect both the PRs and the SMEs’ EFU. This study highlights the intricate dynamics of PR, BAge, and an SME’s decision to employ external finance. The practical and theoretical implications of the study findings are thoroughly discussed.

Suggested Citation

  • Nawal Abdalla Adam, 2024. "Perceived Risk and External Finance Usage in Small- and Medium-Sized Enterprises: Unveiling the Moderating Influence of Business Age," JRFM, MDPI, vol. 17(4), pages 1-16, April.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:4:p:150-:d:1372360
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    Cited by:

    1. Rich Ryan, 2025. "Credit-Market Cyclicality and Unemployment Volatility," JRFM, MDPI, vol. 18(9), pages 1-30, August.
    2. Khamusi Ramudingane & Livhuwani Gladys Nkondo, 2024. "Challenges encountered by SMMEs in accessing bank credit: a case of Vhembe District Municipality," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 13(5), pages 503-512, July.

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