Finance and firm characteristics in Zimbabwe

Abstract

The purpose of this study was to examine the impact of firm-specific characteristics on the accessibility of firm financing in Zimbabwe using 2011 data from World Bank enterprise surveys. The results of the study show that firm characteristics in Zimbabwe determine the type of financing that is used for investment and working capital purposes. Small firms seem to rely more on internal financing as opposed to using bank funds, probably due to their small operations and lack of assets to put up as collateral. The larger firms however find it easier to access bank finance as they are much older in terms of age, have developed good relations with their financial services’ providers and are also able to provide the required collateral to back their lines of credit. Both domestic and foreign-owned firms highlighted financial constraints as a major obstacle to their businesses. However foreign firms seemed to access bank loans easier than domestic firms. Also, gender seems to play a minor role in the financing decisions of the firm. It is therefore recommended that the Government engages the financial market intermediaries to find feasible business financing solutions for all sized firms, especially those owned by locals. This would lead to the much-needed economic growth through investment attraction and employment creation.

Micro determinants of the extent of credit rationing amongst SMEs in Ghana

“…The degree of information asymmetry is also believed to be higher amongst micro and small firms. This result is consistent with most previous studies (Aryeetey et al , 1994; Boocock and Woods, 1997; Jensen and McGuckin, 1997; Makoni and Ngcobo, 2014).…”

“…The odds ratio of 0.879 indicates that a unit increase in the age of the SME makes it 0.879 times less likely to be fully rationed. This result substantiates the argument of Makoni and Ngcobo (2014) that firms with advancement in age have better access to credit as they may have attributes that are appealing to lenders than younger firms.…”

“…Thus, their operation within a small span of time does not offer them the opportunity to accumulate assets to pledge as collateral. Makoni and Ngcobo (2014) show that mature firms in Zimbabwe have access to bank credit easily than younger firms because contrary to younger firms, mature firms have capacity, collateral and performance track record to support their applications. From the above, the level of credit rationing experienced by SMEs is expected to reduce as the business matures.…”

Exploring Multidimensional Financial Inclusion and Manufacturing Firms Performance in a Developing Country: The Case of Nigeria

“…More so, firms with foreign reputation may be more likely to access bank services since they will be adjudged as having the requisite capacity and track record to better manage the fund. Makoni and Ngcobo (2014) confirmed a similar assumption for Zimbabwean firms.…”

Suitability of Treated Wastewater Produced in Sudan for Irrigation Plants

“…The highest value was recorded in July, while the lowest was in November. Makoni and Ngcobo, (2014) reported that variation in EC and TSS values throughout the year was expected since the conditions of wastewater generation differ from day to day as was highly affected by human activities (Figure 3). The BOD values ranged between 79.4 -107.93 mg/L (Figure 4).…”