Capital structure and growth of small and medium sized enterprises (SMES) in Mogadishu -Somalia

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Kampala International University, College of Economics & management.
Several empirical studies focused on different themes & capital structure from different frameworks, yet researchers have not found the optimal capital structure. Decision on capital structure is influenced by different factors among these factors Is the size of the firm. The question of capital structure of SMEs In Somalia yet to be studied, i.e, there is no available enough studies addressing the issue of capital structure in the war-town Mogadishu; hence this gap needs to be filled. The study Investigated the relationship between capital structure and growth of SMEs in Mogadlshu. The objective of the study included determining the effectiveness of capital structure beIng practiced by SME’s In Somalia, to establish the degree of growth encountered by SME’s in Somalia and determining if there a significant\ relationship between two variables. The study was conducted through descriptive correlation research design, data was collected during July 2011 and planed duration was limited to six months, through structured questionnaire obtained information from 101 micro financial institution staff in Mogadishu. The data was analyzed by using SPSS and presented in tables. The study finds that most of the financial institutions in Mogadishu have mechanisms in place for ensuring capital structure and for Improving growth. It further finds a significant positive relationship between capital structure and growth of SMEs In Mogadisho, Somalia. The study conduces that capital structure positively impacts on growth. The study recommends that If financial Institutions in Mogadlshu are to improve growth, they should put more emphasis on capital structure.
A Thesis Presented to the School of Postgraduate Studies and Research Kampala International University Kampala, Uganda In Partial Fulfillment of the Requirements for the Degree Master Business Administration Finance and Banking
Capital structure, Growth of small and medium sized enterprises, Mogadishu -Somalia