SMEs can play a significant role in the economy as drivers of economic growth and
job creation. Many SMEs are, however constrained by their limited access to
finance. This study examines the source of finance of firms in South Africa and
estimates the importance of finance as a predictor of output per worker. Using the
2007 World Bank Enterprise Survey, the study focuses on the firm’s access to
finance, or sources of finance, as a predictor of the productivity of South African
firms. Other factors that are taken into account include sources of finance such as
the overdraft of the firm, collateral available and the type of financial institution used
to acquire financing. These covariates all play an integral role in whether or not the
firm will receive the financing, the amount granted and the repayment terms.
Empirical analysis is done with a Cobb–Douglas production function regression to
determine how output per worker is influenced by various factors. The results show
that output per worker improves as additional finance variables are added to the
regression model. Using an access to finance dummy as the dependent variable, a
logistic regression model is used to calculate the probability of access to finance as a
constraint based on the independent variables. The results of the logistic regression
show that the probability of firms’ experiencing access to finance as a constraint is
decreased by variables such as fixed assets and increase with negative factors such
existing debt and collateral. These results are expected based on previous research
on the topic and confirms that access and finance sources are determinants for firm
growth. Recommendations include more extensive research on the topic, with panel
data over a longer period and specific to a country. Policy recommendations include
amended evaluation techniques, adapted to the individual firm’s requirements and
strengths. / Thesis (M.Com. (Economics))--North-West University, Potchefstroom Campus, 2012.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:nwu/oai:dspace.nwu.ac.za:10394/7344 |
| Date | January 2011 |
| Creators | Ferreira, Marnel |
| Publisher | North-West University |
| Source Sets | South African National ETD Portal |
| Detected Language | English |
| Type | Thesis |
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