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Effects of credit constraints on the productivity of small and medium-sized enterprises in Cameroon

Author

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  • Mandiefe Piabuo, Serge
  • Menjo Baye, Francis
  • Chupezi Tieguhong, Julius

Abstract

This paper assesses the determinants and effects of credit constraints on the productivity of small and medium-sized enterprises (SMEs) in Cameroon. Use is made of the Cameroon enterprise survey data collected by the World Bank in 2009 and an endogenous switching regression model. Results show that interest rates, size of enterprise, size of loan, size of collateral, maturity of loans and legal status of enterprises are major sources of credit constraints faced by SMEs. Results also indicate that medium enterprises are more credit constrained than small enterprises; meanwhile the effects of credit constraints affect small enterprises more than medium enterprises. Credit constrained firms have lower levels of productivity relative to unconstrained firms. These results have implications for the creation of credit bureaux, prudential stringency and rationalization of the Cameroon tax system.

Suggested Citation

  • Mandiefe Piabuo, Serge & Menjo Baye, Francis & Chupezi Tieguhong, Julius, 2015. "Effects of credit constraints on the productivity of small and medium-sized enterprises in Cameroon," MPRA Paper 67135, University Library of Munich, Germany, revised 28 Jul 2015.
  • Handle: RePEc:pra:mprapa:67135
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    File URL: https://mpra.ub.uni-muenchen.de/67135/1/MPRA_paper_67135.pdf
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    References listed on IDEAS

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    1. Brixiova, Zuzana & Kiyotaki, Nobuhiro, 1997. "Private sector development in transition economies," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 46(1), pages 241-279, June.
    2. Maddala,G. S., 1986. "Limited-Dependent and Qualitative Variables in Econometrics," Cambridge Books, Cambridge University Press, number 9780521338257, Fall.
    3. Thorsten Beck & Asli Demirguc-Kunt & Ross Levine, 2005. "SMEs, Growth, and Poverty: Cross-Country Evidence," Journal of Economic Growth, Springer, vol. 10(3), pages 199-229, September.
    4. Thorsten Beck & Asli Demirgüç-Kunt & Vojislav Maksimovic, 2005. "Financial and Legal Constraints to Growth: Does Firm Size Matter?," Journal of Finance, American Finance Association, vol. 60(1), pages 137-177, February.
    5. Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Wiley Blackwell, vol. 14(1), pages 53-68, February.
    6. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    7. Meghana Ayyagari & Thorsten Beck & Asli Demirguc-Kunt, 2007. "Small and Medium Enterprises Across the Globe," Small Business Economics, Springer, vol. 29(4), pages 415-434, December.
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    Cited by:

    1. repec:spr:fininn:v:3:y:2017:i:1:d:10.1186_s40854-017-0073-x is not listed on IDEAS

    More about this item

    Keywords

    Small and medium-sized enterprises; credit constraints; endogenous switching regression model; Cameroon tax system.;

    JEL classification:

    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics
    • C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General
    • D1 - Microeconomics - - Household Behavior
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets

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