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Investigating Factors that Influence SME¡¯s Choice of Services Rendered by Microfinance Institutions: Evidence from La-Nkwantanang Municipality in Ghana

Author

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  • Ebenezer Appiah
  • Deborah Darko Ampeah
  • Wonder Agbenyo

Abstract

There is a recent wave of collapsing Microfinance Institution’s in Ghana which causes SMEs to think critically about the MFI’s they choose to bank with. This has given birth to the investigation of factors that influence SMEs choice of services rendered by microfinance institutions in Ghana. The study adopted the descriptive research design. Stratified random sampling technique was used to select the SMEs for this study and data was collected from a sample of 384 using questionnaires and 279 were returned. The study revealed that electronic banking, convenience and security influences, reputation and legal regulation, interest rate and service provided by the microfinance institution are essential factors that influence the choice of SMEs. The study concludes that the reputation of a business is also essential to its survival, the trust and confidence of the SME can have a direct and profound effect on microfinance institutions. The study recommended that, microfinance institutions should make it a must to obtain all necessary banking licenses from Bank of Ghana before they commence business in order to avoid the embodiment of fear of collapse into potential SME’s who might be willing to transact business with them and also educate those who render services on behalf of the bank. Customer service is very important and should be considered as the first priority of the bank.

Suggested Citation

  • Ebenezer Appiah & Deborah Darko Ampeah & Wonder Agbenyo, 2019. "Investigating Factors that Influence SME¡¯s Choice of Services Rendered by Microfinance Institutions: Evidence from La-Nkwantanang Municipality in Ghana," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(2), pages 98-110, February.
    • Handle: RePEc:ibn:ijefaa:v:11:y:2019:i:2:p:98-110
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    References listed on IDEAS

    as
    1. Abednego Feehi Okoe & Aihie Osarenkhoe & Robert E. Hinson, 2013. "Using the Analytical Hierarchy Process Framework to Study Bank Selection Criteria of Students in Institute of Professional Studies in Ghana," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 4(3), pages 27-38, August.
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    Cited by:

    1. Manpreet Kaur & Kanwaljeet Singh & Sarita Arora, 2023. "Are SMEs relationship seekers or price watchers? Target marketing implications for banks," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 28(3), pages 615-625, September.

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    More about this item

    Keywords

    small and medium scale enterprises; bank choice; micro-finance institutions and Ghana;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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