Access to External Finance by Micro Small and Medium Manufacturing Enterprises in Kumasi Metropolis: Evidence on the Impact of Financial Management Practices.

Abstract

The aim of this study was to analyse how financial management practices of Micro, Small and Medium Manufacturing Enterprises (MSMMEs) affect access to external finance in Ghana. Specifically, the study analysed the effect of preparation and usage of financial information, business plan, capital budgeting and working capital management on access to external finance of MSMMEs in Ghana. The study employed Logistic regression on a sample size of 361 MSMMEs. The study found that MSMMEs’ preparation and use of financial information, business plan and capital budgeting increase the probability of MSMMEs accessing external finance. It is recommended that MSMMEs incorporate good financial management practices in their operations in order to enhance their access to external finance.

Key words: Micro, Small and Medium Manufacturing Enterprises, Financial management practices, Access to finance, Logistic regression