Role of Microfinance Institiutions in Financing Micro and Small Enterprises in Ethiopia

• Autorzy: Betgilu Oshora , Maria Fekete-Farkas , Zoltan Zeman
• Języki publikacji: EN

Abstrakty

EN

Micro and Small Enterprises (MSEs) understood as a means to attain the United Nations 2030 agenda particularly its contribution in reducing the massive unemployment and deep-rooted poverty. Hence, the main aim of this paper is to examine the role of Microfinance Institutions (MFIs) to the survival, value creation and growth of MSEs. For this study purpose, secondary data were collected from the National Bank of Ethiopia (NBE) and triangulated with systematic review of empirical evidences. Principal Component Analysis (PCA) was used to examine the relationships and significance in and between the data emerge. The empirical evidences result reveals that unlike banks, MFIs provide diverse micro credit services to address the diverse socio-economic needs of the poor who cannot afford collateral requirement and besides the result from PCA reveals that the economic growth and access to microcredit service by itself is not enough to create more jobs as they are uncorrelated. However, the empirical evidences shows that, the poorest and most vulnerable people are being left behind due to lack of access to finance, poor market linkage and inadequate skill training among many other factors. Therefore, policy-makers have to develop regulatory frameworks that build sound financial institutions and encourage competition among one another. (original abstract)

Słowa kluczowe

EN

Small business; Financial institutions; Microfinance

PL

Małe i średnie przedsiębiorstwa; Instytucje finansowe; Mikrofinanse

• Czasopismo: Copernican Journal of Finance & Accounting
• Rocznik: 2020
• Tom: 9
• Numer: nr 3
• Strony: 115--130

Twórcy

autor

Betgilu Oshora

• Szent István University, Hungary

autor

Maria Fekete-Farkas

• Szent István University, Hungary

autor

Zoltan Zeman

• Szent István University, Hungary

Bibliografia

• ADA (2017). Small and Growing Businesses in Ethiopia. Brussels: ADA asbl and First Consult PLC.
• Alhassan, F., & Sakara, A. (2014). Socio-Economic Determinants of Small and Medium Enterprises' (SMEs) Access to Credit from the Barclays Bank in Tamale-Ghana. International Journal of Humanities & Social Science Studies, 1(2), 26-36.
• Armstrong, A., Davis, P., Liadze, L., & Rienzo, R. (2013). Evaluating Changes in Banking Lending to UK SMEs Over 2001-12. Ongoing Tight Credit? NIESR Discussion Paper, 408, 1-77.
• Bateman, M. (2011). Microfinance as a development and poverty reduction policy: is it everything it's cracked up to be? http://www.odi.org/publications/5117-microfinance- development-and-poverty-reduction-policy-it-everything-its-cracked-be.
• Becchetti, L., Garcia, M., Trovato, G., & Garcia, M. (2009). Credit Rationing and Credit View: Empirical Evidence From Loan Date. Credit for Economic and International Studies Research Paper Series, 17, 206-227.
• Chakravarty, S., & Shahriar, A.Z. (2010). Relationship Lending in Microcredit: Evidence from Bangladesh. Purdue University Working Papers, 1005, 1-45.
• Cherkos, T., Zegeye, M., Tilahun, S., & Avvari, M. (2018). Examining significant factors in micro and small enterprises performance: case study in Amhara region, Ethiopia. Journal of Industrial Engineering International, 14(2), 227-239. http://dx.doi.org/10.1007/s40092-017-0221-y.
• Desta, Z.F., Bitga, A., & Boyson, J. (2018). Usaid/Ethiopia Cross-Sectoral Youth Assessment Situational Analysis. Washington: USAID's YouthPower.
• Diaz-Serrano, L., & Sackey, F.G. (2018). Microfinance and credit rationing: Does the microfinance type matter? Journal of Sustainable Finance and Investment, 8(2), 114- 131. http://dx.doi.org/10.1080/20430795.2017.1403181.
• Dinh, H.T., Mavridis, D.A., & Nguyen, H. B. (2010). The Binding Constraint on the Growth of Firms in Developing Countries. Policy Research Working Paper, 5485. http://dx.doi.org/10.1596/9780821396322_ch04.
• Drbie, M., & Tilaye, M.B.A. (2013). Deterrents to the Success of Micro and Small Enterprises in Akaki-Kality Sub-City. Journal of Business and Administrative Studies, 5(2), 1-34.
• FDRE (2016). Federal Democratic Republic of Ethiopia Volume I: Growth and Transformation Plan II (GTP II), http://ethiopia.un.org/en/15231-growth-and-transformation- plan-ii.
• FDRE (2020). Sustainable Jobs for All: Plan of Action for Job Creation (2020-2025), Brifing document by Job Creation Comission Ethiopia, http://www.jobscommission.gov.et/wp-content/uploads/2019/11/National-Plan-for-Job-Creation-Brief.pdf.
• Fowowe, B. (2017). Access to finance and firm performance: Evidence from African countries. Review of Development Finance, 7(1), 6-17. http://dx.doi.org/10.1016/j.rdf.2017.01.006.
• Gebreeyesus, M., Ambachew, A., Getahun, T., Assefa, B., Abebe, G., Hassen, S., & Medhin, H. (2018). Main Features of Micro and Small Manufacturing Enterprises in Ethiopia. Addis Ababa: Ethiopian Development Research Institute.
• Helms, B. (2006). Building Inclusive Financial Systems. Washington: World Bank Group. http://dx.doi.org/10.1596/978-0-8213-6360-7.
• IFC (International Finance Corporation) (2017). MSME Finance Gap: Assessment of the Shortfalls and Opportunities in Financing Micro, Small, and Medium Enterprises in Emerging Markets. Washington: World Bank Group.
• ILO (2019). World Employment Social Outlook: Trends 2019. Geneva: International Labour Office.
• ILO (2020). Global Employment Trendsfor Youth 2020: Technology and the Future of Jobs. Geneva: International Labour Office.
• IMF (2020). The Federal Democratic Republic of Ethiopia: 2019 Article IV Consultation and Requests for Three-Year Arrangement under the Extended Credit Facility and an Arrangement under the Extended Fund Facility-Press Release and Staff Report. Pretoria: International Monetary Fund. African Dept.
• ITC (2016). SME Competitiveness In Ghana Alliances For Action in Ghana. Geneva: ITC.
• ITC (2019). SME Competitiveness Outlook 2019: Big Money for Small Business. Financing the Sustainable Development Goals. Geneva: ITC.
• Jalata, G.G. (2014). Challenges and Opportunities of Youth in Africa. US-China Foreign Language, 12(6), 537-542. http://dx.doi.org/10.17265/1539-8080/2014.06.009.
• Ključnikov, A., Majková, M.S., Schwendemann, A., & Knogler, C. (2016). Do SMEs in slovakia face real difficulties in obtaining financing? Comparison of the studies from Slovakia and the EU. Journal of International Studies, 9(3), 36-52. http://dx.doi.org/10.14254/2071-8330.2016/9-3/3.
• Microfinance Barometer (2019). A Look Back at the Trends in Microfinance, http://www.convergences.org/wp-content/uploads/2019/09/Microfinance-Barometer-2019_web -1.pdf.
• Moser, R.M.B., & Gonzalez, L. (2015). Green Microfinance: A New Frontier to inclusive financial services. Revista de Administração de Empresas, 56(2), 242-250. http:// dx.doi.org/10.1590/S0034-759020160209.
• NBE (2016/17). National Bank of Ethiopia Annual Report. Addis Ababa: NBE.
• NBE (2018/19). National Bank of Ethiopia Annual Report. Addis Ababa: NBE.
• Nguse, T. (2019). Role of Microfinance Institutions on Women Empowerment in case of Wisdom Microfinance Institution, Dilla Town - Ethiopia. Journal of Advanced Research in Technology and Management Sciences, 1(4), 1-7.
• Oshora, B. (2016). Independent Variable Impact on Loan Repayment Default in Omo Microfinance Institution - Konso Woreda. International Journal of Management, IT & Engineering, 6(10), 79-96.
• Peprah, J.A., & Ayayi, A.G. (2016). Return to Micro-credit on Small-scale Businesses: A Case Study of Ghanaian MFI. Journal of International Development, 28(4), 606-622. http://dx.doi.org/10.1002/jid.3139.
• Robinson, M.S. (2001). The Microfinance Revolution: Sustainable Finance for the Poor. Washington: World Bank Group.
• Sackey, F.G. (2018). Borrower-lender relationship and access to commercial banks' credit market. Journal of Sustainable Finance and Investment, 9(1), 33-44. http://dx.doi.org/10.1080/20430795.2018.1507130.
• Singla, M.L. (2014). Microfinance and economic development in India: Growth and challenges. International Journal of Research in Finance and Marketing, 4(3), 1-13.
• TIischhauser, K. (2016). Microfinance Market Outlook. Developments, Forecasts, Trends. Zurich: ResponsAbility Investments AG.
• Tra Pham, T.T., & Lensink, R. (2008). Household Borrowing in Vietnam: A Comparative Study of Default Risks of Formal, Informal and Semi-formal Credit. Journal of Emerging Market Finance, 7(3), 237-261. http://dx.doi.org/10.1177/097265270800700302.
• Umar, M., & Ahmed, W. (2017). The Role of Microfinance on Poverty Alleviation and Its Impacts on People and Society: Evidence From the Grameen Bank. Journal of Poverty, Investment and Development, 38, 7-13.
• United Nation Economic Commision for Africa (2020). COVID-19 in Africa: Protecting Lives and Economics. Addis Ababa: Economic Commission for Africa.
• United Nations (2018). World Youth Report: Youth and the 2030 Agenda for Sustainable Development. New York: United Nations.
• United Nations (2019). A Concise Encyclopedia of the United Nations. Leiden: Brill Publishers. http://dx.doi.org/10.1163/ej.9789004180048.i-962.115.
• United Nations Development Programme (UNDP) (2018). National Human Development Report: Industrialization with a Human Face. New York: UNDP.
• Wolday, A., & Woldehanna, T.W. (2015). Access to finance: A tool to improve the performance of youthowned MSEs in Ethiopia.
• World Bank; International Finance Corporation (2019). Creating Markets in Ethiopia: Sustaining Progress Towards Industrialization. Washington: World Bank Group.
• World Bank (2008). Finance for All? Policies and Pitfalls in Expanding Access. Washington: World Bank Group.
• World Bank (2018). Disruptive Finance: Using Psychometrics to Overcome Collateral Constraints in Ethiopia. Washington: World Bank Group.

Identyfikatory

DOI

10.12775/CJFA.2020.015