Role of Credit Institutions on the Profitability and Operations of a Small and Medium Scale Business
CHAPTER ONE
OBJECTIVE OF THE STUDY
The objectives of the study are;
- To determine the effect of credit on the growth of Small and medium enterprises.
- To find out the role of training on the growth of Small and medium enterprises
- To ascertain the relationship between credit institutions and the profitability of small and medium scale business
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
A number of studies have been conducted on microfinance and SMEs in China. China Microfinance Industry Assessment Report provided by the China Association of Microfinance gives the definition of microfinance in China, and examines the impacts of microfinance development at macro, meso, and micro levels, spanning over agricultural industry, financial markets, and social vulnerable groups such as women and farmers (He, Du, Bai, and Li, 2009). Many studies then have focused on each level specifically. Li (2006)3 concludes that microfinance has offered an effective finance method for the construction of new socialist rural regions and has won the support of agriculture and farmers. Dyar, Harduar, Koenig, and Reyes (2006)4 together examine the impact of microfinance on gender inequality in China and have discovered that there are many benefits to providing microfinance to women, despite lack of conclusive evidence on significantly reducing gender inequality. Microfinance allows women to enjoy greater economic power, better living quality, and stronger social and political empowerment. Park, Ren, and Wang, (2004)5 assess the potential role of microfinance for financial reform in China and suggest that China’s financial reforms have yet to create an institutional space in which microfinance can operate, thrive, and expand. Therefore, expansion of microfinance will almost definitely have to await substantial further progress in creating a well-developed commercial, financial system. In the meantime, however, microfinance programs are competing with China’s official financial institutions and levying pressure on the practice and reform of the rigid state-owned financial institutions. In addition to research on reform, studies have also been conducted on the structure of microfinance. Sun (2008)6 studies the policy and legal framework for microfinance in China and suggests that the Chinese government will have to continue to focus on improving the legal and political environment for microfinance if the industry is to continue to grow and prosper. Park and Ren (2001) study the nongovernmental and governmental microfinance programs from cultural perspective and find that nongovernmental programs perform well in aspects of reaching the poor (targeting), guiding financial and operational performance (sustainability), and establishing program benefits (impact).
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to role of credit institutions on the profitability and operations of a small and medium scale business.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain role of credit institutions on the profitability and operation of a small and medium scale business
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of role of credit institutions on the profitability and operation of a small and medium scale business
Summary
This study was on role of credit institutions on the profitability and operation of a small and medium scale business. Three objectives were raised which included: To determine the effect of credit on the growth of Small and medium enterprises, to find out the role of training on the growth of Small and medium enterprises, to ascertain the relationship between credit institutions and the profitability of small and medium scale business. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of selected SMEs in Uyo. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up managers, secretaries, senior staff and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
Credit financing is one of the factors responsible for performance of SMEs in Uyo. Extending credit to SMEs enables them to access essential resources, increase business diversification and subsequently increase productivity levels. Credit institutions that have facilitated growth and performance of SMEs provide affordable interest rates; train their clients on the relevancy of keeping financial information and, how to use the acquired loan for the intended purpose.
Recommendation
Credit institutions should continue providing credit at affordable rates while endeavoring to train their clients on how to keep financial information, which is essential in assessing the borrower’s credit worthiness. This will help SME in growing their business to successful and performing businesses. On the other hand, SMEs should practice documenting their transactions, including information on personal characteristics, as they are essential in assessing the credit worthiness of potential borrowers
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