Challenging Factors Affecting Access to Finance by Female Micro Entrepreneurs in Anambra State, Nigeria

Metu, Amaka; Nwogwugwu, Uche

doi:10.1080/15228916.2022.2064677

Cited by 8 publications

(6 citation statements)

References 11 publications

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“…Microcredit is a wellknown option, but also strategies such as partial credit constraints help to reduce the burden of asymmetries of information (Barajas et al, 2020). 15 Another relevant study estimates that Nigerian microentrepreneur women have 49% greater odds of accessing credit facilities if they have prior knowledge about micro credit benefits (Metu & Nwogwugwu, 2022). 16 A good reference for several countries is Grohmann et al (2018), which find that one percentage point increase in the proportion of financial literate people in a country, increases ownership of bank account by 0.511 percentage points.…”

Section: Discussionmentioning

confidence: 99%

Financial inclusion and business practices of microbusiness in Colombia

2023

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Financial inclusion is known to be relevant for improving the growth perspectives of microbusinesses. This research has three aims. First, to explore how adopting business practices can impact the usage of financial products and services of these firms. Second, to determine if higher levels of microbusinesses’ formalization mediate the impact. Third, to establish if there are differences according to gender and education level. A structural equation model was estimated to test these hypotheses while considering the potential endogeneity of the main variables of interest. The model includes latent variables modeled in the form of confirmatory factor analysis. Estimates are based on self-reported information collected through a survey of 1542 microentrepreneurs in 10 Colombian cities in 2019. The results show that microentrepreneurs who adopt (more) business practices have more financial inclusion. No specific category of business practices drives the results. The effect is larger for men than women and is not present for microentrepreneurs of low education levels. Furthermore, personal initiative, a psychological construct, indirectly relates to being more financially included by increasing the adoption of business practices. Finally, there is no evidence that this is driven by higher levels of formalization regardless of the specific set of requirements that are considered. Our findings support efforts to improve business skills in microentrepreneurs and call for more comprehensive public policy strategies. These findings open the door to using soft skill-based training programs that enhance business practices, to improve microbusinesses’ financial inclusion.

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Section: Discussionmentioning

confidence: 99%

Financial inclusion and business practices of microbusiness in Colombia

2023

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“…Businesses with strong networks are more likely to be able to secure bank financing than those without such networks as the networks can aid private firms with loan applications, for example, by recommending reputable enterprises to banks in order to reduce the efficiency losses associated with information asymmetry, which can be beneficial to both parties (Talavera et al, 2012). In a study on women entrepreneurs in Nigeria, Metu and Nwogwugwu (2022) find that the inability to get guarantors and information asymmetry were some of the critical challenged by these entrepreneurs when attempting to access microcredit. These challenges may be mitigated by the existence of strong social networks.…”

Section: Social Capital and Access To Financementioning

confidence: 99%

“…Increased financial literacy results in a better understanding of debt management, which guarantees that a good credit history is sustained (Hakim et al, 2018). Metu and Nwogwugwu (2022) find that the fear of default is one of the main reasons the female micro entrepreneurs choose not to access microcredit facilities. Financial literacy prepares MSME owners/ managers during difficult financial times by emphasizing risk mitigation methods such as avoiding excessive debt (Mabula and Ping, 2018).…”

Section: Financial Literacy and Access To Financementioning

confidence: 99%

“…, 2012). In a study on women entrepreneurs in Nigeria, Metu and Nwogwugwu (2022) find that the inability to get guarantors and information asymmetry were some of the critical challenged by these entrepreneurs when attempting to access microcredit. These challenges may be mitigated by the existence of strong social networks.…”

Section: Theoretical Foundations and Hypotheses Developmentmentioning

confidence: 99%

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Influence of human capital and social capital on MSME access to finance: assessing the mediating role of financial literacy

Hj Talip,

Wasiuzzaman

2023

IJBM

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PurposeThe authors investigate the role of financial literacy in influencing the relationship between human capital and social capital, with access to finance of micro, small and medium enterprises (MSMEs).Design/methodology/approachData were gathered from 337 MSMEs in Brunei Darussalam, and analysis on the data was carried out using a number of statistical methods. The relationships between human capital, social capital, financial literacy and access to finance were analyzed using PLS-SEM.FindingsThe results show that human capital does influence access to finance but contrary to previous studies, the influence is negative. Financial literacy is an important element in the relationship between human capital, social capital and access to finance, although it plays a greater role in the relationship between social capital and access to finance. Further analysis shows that financial knowledge is significant in moderating the relationships between human and social capital with access to finance. Financial skills is found to only moderate the relationship between social capital and access to finance.Originality/valueTo the authors' knowledge, this study is the first that integrates the human capital, social capital, financial literacy and access to finance in a single model. The authors also highlight the importance of enhancing the financial literacy of MSMEs so that the problem of access to finance can be alleviated, especially in developing countries.

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“…While women's lack of access to enterprise finance is well documented in the literature, there is inadequate understanding of how they navigate their way around this obstacle. This is partly due to the predominance of quantitative studies focused on measuring the financing gap between male and female entrepreneurs (Ghosh et al, 2018;Metu and Nwogwugwu, 2022;Taqi et al, 2021) to the relative neglect of in-depth studies of the strategies by which female entrepreneurs overcome their limited access to funds. To address this gap, this paper throws light on the ways that women navigate around the problem of limited access to formal credit facilities in order to start, operate and expand their enterprises as well as the factors that shape their attitudes towards different credit sources.…”

Section: Introductionmentioning

confidence: 99%

“You cannot rely on bank loans to expand your business”: aversion to formal credit among female micro-entrepreneurs in Ghana

Ackah,

Torvikey,

Obeng Adomaa

et al. 2023

IJSE

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PurposeThe marginalisation of female entrepreneurs in accessing credit is well documented. Yet, how female entrepreneurs navigate through the marginalisation to gain funding is under-explored.Design/methodology/approachThe authors address this gap using qualitative data from 30 female entrepreneurs in three neighbourhoods with varying socio-economic characteristics in Ghana's capital, Accra.FindingsThe authors find a marked aversion to bank loans among respondents. Consequently, they nurtured trust in their social circles in order to facilitate access to informal credit from internal (e.g. family and friends) and external (e.g. trade credit, associations and religious organisations) sources. This aversion to loans from formal financial institutions (FFIs) had a socio-cultural aspect, including cumbersome application procedures, a deep-rooted fear of the social consequences of defaulting and religious prohibition against interest payment for Islamic traders.Social implicationsThis paper shows that providing formal access to credit is not enough to support women's entrepreneurship if the socio-cultural factors inhibiting women's access to credit from FFIs are not addressed.Originality/valueThe findings suggest that trust is an important factor that bridges the gap in female entrepreneurs' access to funding given their heavy reliance on informal sources of funding.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-02-2023-0090

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Challenging Factors Affecting Access to Finance by Female Micro Entrepreneurs in Anambra State, Nigeria

Cited by 8 publications

References 11 publications

Financial inclusion and business practices of microbusiness in Colombia

Financial inclusion and business practices of microbusiness in Colombia

Influence of human capital and social capital on MSME access to finance: assessing the mediating role of financial literacy

“You cannot rely on bank loans to expand your business”: aversion to formal credit among female micro-entrepreneurs in Ghana

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