Commercial banks perception on the financing of small and medium enterprises (SME) (a study of western region)

Abstract

Financing is the act of providing funds for business activities, making purchases or investing (Anderson, 2004). Financial institutions and banks are in the business of financing as they provide capital to businesses, consumers and investors to help them achieve their goals. This study focused on perception of commercial banks on financing Small and Medium Enterprises (SMEs) in the Western Region. Among the perception of commercial banks in financing Small and Medium Enterprises (SMEs) studies that have been done, little knowledge exists on those that lay focus on commercial banks that finance the small and Medium Enterprises (SMEs).This study was then designed to bridge this knowledge gap by critically determining the perception of commercial banks in financing Small and Medium Enterprises (SMEs) and to what extent. Major findings from this study were that both internal and external perception influencing the financing of Small and Medium Enterprises to a large extent. This study revealed that whilst commercial banks do document their financing policies, effective disbursement or issuance of finances to the small and medium enterprises is a big hurdle, highlighting factors such as top management commitment, clear identification of activities to be carried out to effectively implement financing to the small and medium enterprises, existing legal requirements, existence of budgetary allocation and internal control mechanisms, as those that must be adhered to if successful financing of the small and medium enterprises by commercial banks in the western region is to take place. The study is presented in five chapters, each with various sections through which the researcher has tried to discuss the above issues. The findings of this study should be understood and evaluated in light of the limitations of the study.