Entrepreneurial Financing and Performance of Small and Medium Enterprises (SMEs) in Southwest Nigeria
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Date
2024-12
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Publisher
Lead City University, Ibadan
Abstract
This study examines the relationship between various types of entrepreneurial financing and the performance of small and medium-sized enterprises (SMEs) in Southwest Nigeria. Utilizing a survey research design, data were collected from 393 participants through structured questionnaires. Analytical methods included frequency counts, inferential statistics, and multiple regression analyses. Findings reveal significant relationships between specific financing sources and SME performance. Personal savings show a strong positive relationship with SME performance (r(1/391) = 0.910, p < .05), indicating that entrepreneurs relying on personal funds tend to experience higher business performance. Similarly, loans also exhibit a significant positive correlation with SME performance (r(1/391) = .673, p < .05), suggesting that access to borrowed funds is beneficial for business growth. Inherited wealth has a moderate but significant relationship with SME performance (r(1/391) = .180, p < .05), indicating that background financial assets can contribute to business success. The study further indicates that ploughed-back profits (r(1/391) = .159, p < .05) and hire purchase arrangements (r(1/391) = .364, p < .05) also play significant roles in enhancing SME performance. Additionally, the location of SMEs emerged as a significant determinant of their success, with a positive correlation between strategic location and business performance (r(1/391) = .515, p < .05). This finding suggests that businesses in advantageous locations benefit from increased customer traffic, access to resources, and improved market reach. The study concludes that entrepreneurial financing is crucial for the productivity of SMEs, with financial decisions significantly impacting overall business success. It recommends that SME owners consider location a strategic factor for growth. Moreover, it calls on government and local authorities to improve infrastructure and support services in rural areas to create a more balanced economic environment, enabling SMEs in these regions to thrive and contribute to regional development.
Keywords: Entrepreneurship, Finance, Performance, Small and Medium Enterprises.
Word Count: 292
Description
Keywords
Entrepreneurship, Finance, Performance, Small and Medium Enterprises.
Citation
Kate Turabia