Which New Small and Medium Enterprises in South Africa Have Access to Bank Credit?

OLAWALE FATOKI, AKINWUMI ODEYEMI

Abstract


New SMEs are very important to the economy of South Africa. Their failure rate at about 75% is one the highest
in the world. Lack of finance is one of the primary reasons for the failure of new SMEs in South Africa. About
75% of all applications for bank credit by new SMEs are rejected. This objective of the paper was to investigate
the determinants of credit approval for new SMEs. The survey method and self-administered questionnaires were
used for data collection. 445 respondents took part in the survey. Data was analysed by logistic regression. The
results indicate that managerial competencies, business information, networking, location, crime, business size
and incorporation are significant determinants of credit approval.

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

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