| dc.description.abstract | The study examined Financial Characteristics, Age of The Firm and Access to Finance by Small and Medium Enterprises in Uganda; A Case of Namanve Industrial Area. The study was motivated by the observed low rates of access to finance by SMEs in Uganda. The objectives of the study were to assess the effect of quality of financial statements on access to finance by SMEs in Namanve industrial area, to examine the effect of collateral availability on access to finance by SMEs in Namanve industrial area, to analyse the moderating effect of age of the firm on the relationship between quality of financial statements and access to finance by SMEs in Namanve industrial area and to assess the moderating effect of age of the firm on the relationship between collateral availability and access to finance by SMEs in Namanve industrial area. Four alternative hypotheses were tested based on the objectives. The study adopted the Resource based Theory and Life Cycle Theory of consumption to conceptualize the variables as used in the study. A cross sectional survey design was adopted where both quantitative and qualitative data was collected. A sample of 166 SMEs determined using Krejcie & Morgan table out of a population of 212 SMEs was selected. Using quota sampling and stratified sampling methods 166 questionnaires were administered to collect quantitative data, only 140 questionnaires were filled and returned constituting a response rate of 84.34%. Qualitative information was collected using an interview guide for triangulation purposes from SME owners, financial institutions, and auditors using an interview guide and a purposive sampling method on the selection of respondents. Prerequisite tests were carried out were data was tested for normality and multicollinearity. In the study, analysis was done at different levels first with descriptive statistics, followed by a multiple regression analysis and hierarchical regression analysis. The findings of the study revealed a positive significant effect of quality of financial statement on access to finance (Beta =0.119, P value =0.024), a positive significant effect of collateral availability on access to (Beta =0.772, P value =0.000), age of the firm had no moderating effect on the relationship between quality of financial statements and access to finance (Beta =0.003, p value =0.969, Adjusted R² = .371, F (1, 136) = 0.002, p>.05) while results also revealed that age of the firm has a significant moderating effect on the relationship between collateral availability and access to finance (Beta =-0.123, p value =0.020, Adjusted R² = .678, F (2, 137) = 147.463, p < .05). The study recommended that efforts should be made to ensure that the financial statements of the enterprises are prepared by qualified accountants and interim audits conducted to ensure quality reports are presented following the International Financial Reporting Standard. In addition, the operators of SMEs have to own more tangible assets that can create higher value on their firm to accelerate borrowing security. Age of the firm need to be given attention, younger firms (less than 4 years) should rely less on bank financing and more on informal financing as it is often difficult and expensive for young SMEs to access bank financing due to less collateral availability. Future studies should be directed to finding other factors that determine access to finance by SMEs. Studies in future can also extend to other parts of the country and also involving comparative studies with other countries
Key words: Financial characteristics, Quality of financial statements, Collateral Availability, Age of the firm and Small and Medium Enterprises. | en_US |
