Banking Services and the Status of Small and Medium Scale Enterprises in Ruiru Town;
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Date
2010-09
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Kampala international international : College of Economics and Management
Abstract
Formal commercial banks have been recommended as the major source of
external financing for the Small and Medium scale Enterprises (SMEs) sector. Tn~
is because the informal financial institutions are known to be dogged with both
inadequate regulatory framework and problems of financial proficiency therefore
making them unreliable in propagating sustainable development of this sector.
The study examined the level of interaction between banks and SMEs and the
specific gains realized by SMEs sector as a result of this interaction. The study also
assessed the bottlenecks experienced by both banks and SMEs in the process of
relating with one another. Finally, the study established the different strategies
adopted by banks in deepening their service delivery to the SMEs sector. This was
accomplished by gathering the relevant information through questionnaires from
the proprietors of SMEs operating in Ruiru town and staff of the banks with outlets
in the area.
The study found that though banks offered to SMEs a wide variety of services,
SMEs have not been able to fully utilize these facilities because of the procedural
and cost burdens involved. Banks also perceived lending to SMEs as a risky
venture and therefore adopt a more cautious approach or charged a risk premium
which further kept the SMEs at bay. Nonetheless, it was evident from the study
that despite the existing limitations, banks have played a pivotal role in promoting
the welfare of SM Es.
In the light of the findings of the study, the researcher made various
recommendations meant to address the critical financing problem in the SMEs
sector which included broad-based government policy interventions, enhanced
capacity building through training of proprietors and managers as well as
rationalized application of bank’s lending policies.
Description
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 of Masters of Business Administration
Keywords
Banking Services, Small and Medium Scale Enterprises, Ruiru Town;