Sources of finance and performance of small and medium enterprises

Abstract

This study examines the relationship between access to finance and performance of micro, small, and medium enterprises (MSMEs) in Gwagwalada area of Abuja. Specifically, this study examines the relationship between commercial bank loans and performance of MSMEs. Also, this study seeks to know the relationship between Microfinance bank loans and performance of MSMEs The researcher obtained data from primary and secondary sources. In all, 180 questionnaires were considered valid for analysis.  The researcher made use of simple random sampling techniques and descriptive and Pearson correlation to test the hypotheses. The findings demonstrate a positive but insignificant relationship between access to finance and financial performance of MSMEs. This result suggests that availability of funds enhances MSMEs financial performance but access to finance is not the only variable that may influence MSMEs performance. Further, results indicate a positive relationship between commercial bank loans, microfinance bank loans and MSMEs performance.