Access to Credit and Growth of Small and Medium Scale Enterprises in the Ho Municipality of Ghana

Abstract

The study examines the effect of access to credit on the growth of Small and Medium Scale Enterprises (SMEs) in the Ho Municipality of Volta Region of Ghana by using both survey and econometric methods. The survey involved a sample of 78 SMEs in the manufacturing sector from the Ho Municipality. The specified econometric model has firm growth as t he dependent variable, and the independent variables include access to credit, total current investment, age of the firm, start-up capital, education level and annual turnover of the firm. Both survey and econometric results show that access to credit exerts a significant positive effect on growth of SMEs in the Ho-Municipality of Ghana- the main policy implication of the study therefore is that the government should try hard to meet the credit needs of the SMEs in the country for a speedy economic growth.