The Impact of Firm Characteristics in Access of Financing by Small and Medium-sized Enterprises in Tanzania

Alex Reuben Kira, Zhongzhi He

Abstract


The contribution of Small and Medium-sized Enterprise (SME) sector in economic development, job creation
and income generation has been recognized worldwide. However, these contributions are not effectively
harnessed in Tanzania. The main challenge limiting the sector to contribute fully is a shortage of finance. This
study examines the impact of firm characteristics in access to debt financing by Tanzanian SMEs. The equation
specified access to finance as dependent variable while firm characteristics as independent variable. Data
collection was conducted through self-administered questionnaire in a survey of 163 Tanzanian firms. The
statistical analysis of data involved Pearson correlation and logistic regression to establish the association
between dependent and independent variables. The results indicate that firm’s location, industry, size, business
information, age, incorporation and collateral influence access to debt finance. The study recommends that
Tanzanian SME operators should maintain attractive firm attributes to stimulate lenders to extend debt financing
to their investments.


Full Text: PDF DOI: 10.5539/ijbm.v7n24p108

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International Journal of Business and Management   ISSN 1833-3850 (Print)   ISSN 1833-8119 (Online)

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