aTitle: Small business finance in Sub-Saharan Africa: the case of Ghana

Author(s): Charles Amo Yartey, (African Department, International Monetary Fund,

Washington, DC, USA)
Citation: Charles Amo Yartey, (2011) "Small business finance in Sub-Saharan Africa:
the case of Ghana", Management Research Review, Vol. 34 Iss: 2, pp.172 -
185
Keywords: Business development, Capital structure, Corporate finances, Ghana
Article
Research paper
type:
DOI: 10.1108/01409171111102795 (Permanent URL)
Publisher: Emerald Group Publishing Limited
Abstract: Purpose – This paper aims to examine how unlisted companies in Ghana
finance their growth and to what extent do they rely on internal finance
relative to external sources of finance. Additionally, the paper seeks to
investigate the determinants of the capital structure of unlisted companies in
Ghana.

Design/methodology/approach – The paper uses the Singh-Hamid

methodology as well as panel data techniques to evaluate the financing
decisions of unlisted companies in Ghana.

Findings – The analysis shows that unlisted firms in Ghana finance most of
their growth from external debt and they are also characterized by shorter
debt maturity. The results also show that the dominant factors affecting the
debt equity ratios of unlisted firms in Ghana are size, firm growth, tangibility,
profit margin, and financial development.

Research limitations/implications – Overall, the evidence in this paper

suggests that standard models of corporate finance can be applicable to
unlisted companies in Ghana.

Practical implications – Informative when planning for future development of

the small business sector of the Ghanaian economy.

Originality/value – Provides empirical evidence on how unlisted companies

in Ghana finance their growth and what determines their capital structure.