International Business Management

Year: 2016
Volume: 10
Issue: 9
Page No. 1679 - 1686

Influence of Access to Bank Credit on Enterprises Productivity in Ethiopia: Does Credit Matter to Improve Productivity?

Authors : Ajebush Argaw Shafi, Grag K. Ajay and Mammo Muchie

Abstract: This study examines SME productivity performance as a factor of access to credit within the Ethiopian economy. Empirical analysis is based on Ethiopian Large and Medium Manufacturing Enterprise Survey (LMMIS) data 2005-2011. Precisely, the research aims to understand whether or not SMEs with access to bank credit have higher levels of Total Factor Productivity (TFP) relative to counterparts without access to credit. To address this objective the study uses fixed effect regression modelling and neoclassical production function for specifying the relationship between inputs, efficiency and outputs. The study also applies inferential statistical techniques such as OLS (ordinary least square) for measuring the significance level and multivariate analysis to test the hypotheses of association. The following main conclusions can be drawn from the study. The study proves that SMEs that are run by individuals who have access to bank credit have a higher level of TFP. More precisely, average TFP among enterprises with access to bank credit is 1.3 times higher than enterprises with no access.

How to cite this article:

Ajebush Argaw Shafi, Grag K. Ajay and Mammo Muchie, 2016. Influence of Access to Bank Credit on Enterprises Productivity in Ethiopia: Does Credit Matter to Improve Productivity?. International Business Management, 10: 1679-1686.

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