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The Impacts of Interest Rate Fluctuations on the Growth of Small and Medium Enterprises (SMEs) In Accra

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  • Kwame Godsway Kisseih

Abstract

The establishment and the sustenance of SMEs in Ghana is a perennial problem. The owners and managers of the sector believe that they face difficulty in operating in the period of slow economic growth. Despite a whole range of measures introduced over the years from 1993 to date in order to control the interest rate fluctuations by governments for accelerated growth, the country had rather recorded the opposite. This paper investigates the impacts of interest rate fluctuations on the growth of Small and Medium Enterprises in Accra. Lack of government’s vision for SMEs sector, limited access to finance, trade liberalization, high collateral demand by banks are some of the challenges facing SMEs. The data used was a balanced data of six SMEs randomly selected. The primary and secondary data were analysed using SPSS and Microfit software respectively, and ARDL technique was also employed, with the application of tables in percentage. The study began with a unit root test. The ARDL technique of co-integration and F-Statistic compared to the critical values indicating a co-integration relationship between EBIT and interest rate and other variables. The results indicate that there is interdependence between the SMEs profitability and interest rate, bank loans and the size of business. The paper recommends the re-introduction of minimum credit allocation by banks, clear-cut policy for the sector and many more.

Suggested Citation

  • Kwame Godsway Kisseih, 2017. "The Impacts of Interest Rate Fluctuations on the Growth of Small and Medium Enterprises (SMEs) In Accra," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 7(2), pages 44-53, April.
    • Handle: RePEc:hur:ijaraf:v:7:y:2017:i:2:p:44-53
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    References listed on IDEAS

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    1. Pesaran, M. Hashem & Shin, Yongcheol, 1996. "Cointegration and speed of convergence to equilibrium," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 117-143.
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