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Access to credit and informality among micro and small enterprises in Ethiopia

Author

Listed:
  • Gemechu Ayana Aga
  • Barry Reilly

Abstract

This paper examines the determinants of Micro and Small and Enterprises (MSEs) access to credit in Ethiopia using detailed firm-level data collected in 2003. Its basic purpose is to identify the various attributes of a firm that determine its access to credit with an emphasis on the role of firm formality. We find that informal firms are more credit constrained compared to formal firms. A firm's location, membership of a business association and maintaining an accounting record are found to be important determinants of access to credit. Further, we find firms whose owners have vocational training are more credit constrained than those who are not, as are firms that are exclusively male owned. There is no systematic relation between access to credit and a firm's age, size and the sector in which it operates. The paper concludes with possible policy interventions designed to improve access to credit for MSEs in Ethiopia.

Suggested Citation

  • Gemechu Ayana Aga & Barry Reilly, 2011. "Access to credit and informality among micro and small enterprises in Ethiopia," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(3), pages 313-329.
  • Handle: RePEc:taf:irapec:v:25:y:2011:i:3:p:313-329
    DOI: 10.1080/02692171.2010.498417
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    Cited by:

    1. repec:eee:riibaf:v:41:y:2017:i:c:p:336-346 is not listed on IDEAS
    2. Antonio Baez-Morales, 2015. "“Determinants of Micro Firm Informality in Mexican States 2008-2012”," AQR Working Papers 201509, University of Barcelona, Regional Quantitative Analysis Group, revised Apr 2015.

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