scholarly journals WORKING CAPITAL FINANCING PREFERENCE AMONG SMALL BUSINESSES IN CAMBODIA

2020 ◽  
Vol 2 (No.1) ◽  
pp. 48-61
Author(s):  
Muhammad M. Ma'aji ◽  
Phouneta Sok ◽  
Chanramy Long
Keyword(s):  
Small Businesses ◽  
Bank Loan ◽  
Information Costs ◽  
Working Capital ◽  
Significant Information ◽  
Credit Associations ◽  
Financing Preference ◽  
Savings And Credit Associations ◽  
Capital Financing ◽  
Internal Sources

The purpose of this paper is to investigate working capital financing preference among small businesses in Cambodia using a quantitative and qualitative approach. Small business often relies heavily on internal finance as a major source of short-term finance for working capital needs. This is because small businesses are likely to face problems associated with their size when accessing external finance, such as information asymmetry and higher agency costs. Interestingly, using descriptive statistics and inferential statistics, the findings lead us to believe that these firms mostly relied on internal sources (retained profit, early settlement discount, delayed payment to suppliers) of finance as compared to external sources (bank loan and equity). In some cases, they have to rely on informal sources (private, family, friend, money counting/lenders, funds/wealthy families, rotating savings and credit associations) to finance working capital requirement. These results suggest that firms experience significant information costs that prevent them from gaining access to traditional sources of financing. The findings of the study will be useful to the financial institutions that fund SMEs and can help the policymakers to formulate strategies and programs that will support SMEs at different stages of the financial chain in Cambodia.

scholarly journals The Relentless Pursuit of Financial Capital for Micro-enterprises: Importance of Trust and Social Capital

2011 ◽  
Vol 6 (2) ◽  
pp. 78-97 ◽  
Author(s):  
Adam Brown ◽  
Steve Garguilo ◽  
Khanjan Mehta
Keyword(s):  
Social Capital ◽  
Small Businesses ◽  
Financial Capital ◽  
Business Strategies ◽  
Small Business Owners ◽  
Microfinance Institutions ◽  
Credit Associations ◽  
Credit Cooperatives ◽  
Savings And Credit Associations ◽  
Complex Relationships

In developing countries, prospective entrepreneurs struggle with getting access to financial capital to start small businesses. Formal lending sometimes works for solidarity groups of small business owners who approach microfinance institutions (MFIs) to access capital for expanding their businesses, but MFIs do not typically lend money to entrepreneurs interested in starting new businesses. In order to create an environment where startup business and entrepreneurship thrives, it is crucial to meet the needs of the marginalized entrepreneurs. As a response to this trend, the informal lending and credit market in rural Kenya is growing fast, but little research is available regarding the mechanics of this system. Instead of decomposing the microfinance industry into a binary relationship between MFIs and their clients, this paper views the financial capital industry as a multi-actor system (informal lenders, rotating savings and credit associations, solidarity groups, savings and credit cooperatives and microfinance institutions) and discusses how their success is mutually dependent. This paper delves further into the dynamics between these actors and the role of trust and social capital in their complex relationships. Entrepreneurs targeting developing communities need to understand these relationships and challenges to develop business strategies that make their products and services accessible through appropriate partnerships.

scholarly journals Trade credit and bank credit as alternative governance structures in South Africa: evidence from banking sector development

2017 ◽  
Vol 12 (3) ◽  
pp. 204-214
Author(s):  
Shame Mugova
Keyword(s):  
Corporate Governance ◽  
Banking Sector ◽  
Trade Credit ◽  
Good Governance ◽  
Bank Loan ◽  
Governance Structures ◽  
Working Capital ◽  
Banking Sector Development ◽  
Governance Practices ◽  
Capital Financing

Financial sector development is an influential force that outlines the financing and governance of firms in emerging economies. Suppliers and bankers represent alternative governance structures to a firm because of their trade credit and loan requirements, respectively. The continuous monitoring of investment by banks and suppliers impacts on corporate disclosure and practices. The study compares a sample of Johannesburg Stock Exchange (JSE) firms listed on the Socially Responsible Investment (SRI) index which measures corporate governance and those not listed on the index. A Generalized Least Squares (GLS) random effect regression of banking sector development and trade credit of firms listed on the JSE SRI and non-SRI listed firms was done to ascertain whether trade credit gives firms a preferred governance system and structure. The findings affirm that good corporate governance practices improve access to bank loans for working capital financing and good governance practices do not consequently result in more bank loan as a preferred governance structure for working capital financing compared to use of trade credit.

scholarly journals Organizational Form, Performance And Information Costs In Small Businesses

2011 ◽  
Vol 17 (4) ◽  
Author(s):  
Alberto M. Bento ◽  
Lourdes F. White
Keyword(s):  
Agency Theory ◽  
Small Businesses ◽  
Organization Design ◽  
Organizational Form ◽  
Decision Variable ◽  
Information Cost ◽  
Information Costs ◽  
Font Size ◽  
Empirical Results ◽  
Design Theories

<p class="MsoNormal" style="text-align: justify; margin: 0in 37.8pt 0pt 0.5in; tab-stops: 387.0pt;"><span style="mso-bidi-font-style: italic;"><span style="font-size: x-small;"><span style="font-family: Batang;">This extends agency theory to introduce organizational form as a decision variable that directly influences risk bearing and the costs of control in small businesses.<span style="mso-spacerun: yes;">&nbsp; </span>Based on information cost and organization design theories, we propose a relationship between organizational form and information costs.<span style="mso-spacerun: yes;">&nbsp; </span>Our empirical results reveal that organizational form is the first or second most important decision variable related to performance and information costs in small businesses. </span></span></span></p>

scholarly journals Decision-Making Framework For Small Business With Limited Available Capital

2021 ◽  
Author(s):  
Milad Around
Keyword(s):  
Decision Making ◽  
Small Business ◽  
Small Businesses ◽  
General Level ◽  
Working Capital ◽  
Financial Assessment ◽  
Current State ◽  
Business Entities ◽  
A Current

In the world of business special attention is paid to entrepreneurs for their potential and large corporations for their impact on the market. Due to this, small businesses often fall short of resources and tools to help them grow. The aim of this dissertation is to introduce a framework for decision making to small businesses as a tool to help embed more structure into their organization. The framework was then applied to two distinct case studies to display its functionality and usefulness. The framework consists of several steps: 1) corporate plan and financial assessment 2) a current state analysis 3) a quantitative and mathematical feasibility study of the decision The framework in each case study resulted in an objective and qualified decision. It also suggests that, due to the unique structure and characteristics of each small business, the framework proposed would only be relevant and applicable on a general level and more work is required to refine the details in order to be able apply it universally to business entities with limited working capital.

scholarly journals Pengaruh NPF, FDR, CAR dan Inflasi terhadap Penyaluran Pembiayaan Modal Kerja pada BPRS di Indonesia

2020 ◽  
Vol 1 (1) ◽  
pp. 137-151
Author(s):  
Hasna Rohmatunnisa ◽  
Leni Nur Pratiwi
Keyword(s):  
Analysis Data ◽  
Capital Adequacy ◽  
Analysis Method ◽  
Working Capital ◽  
Financial Service Authority ◽  
Linear Effect ◽  
Independent Variables ◽  
Capital Adequacy Ratio ◽  
Capital Financing ◽  
Linear Effects

This research aims to analyze how the independent variables of Non Performing Financing, Financing  to Deposit Ratio, Capital Adequacy Ratio, and Inflation impact for the Distribution of Working Capital Financing. Data analysis method is multiple regression analysis, data obtained by monthly reports from Islamic Banking Statistics which published by Indonesia Financial Service Authority  (OJK) and Inflation data which published by Indonesia Bank period Jan 2014 until Dec 2018 with the total of 58 data samples. The result of this research shows that Non Performing Financing (NPF) has a significant positif  linear effect on Working Capital Financing, Financing to Deposit Ratio (FDR) and Capital Adequacy Ratio (CAR) have significant negative linear effects on Working Capital Financing, while Inflasi had no effect on Working Capital Financing. Concurrently, all the variables have significant effects on Working Capital Financing.

Economics of savings-based finance: an interest-free model of rotating savings and credit association in Turkey

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yusuf Dinç ◽  
Rashed Jahangir ◽  
Ruslan Nagayev ◽  
Fahrettin Çakır
Keyword(s):  
Financial Market ◽  
Design Methodology ◽  
Data Set ◽  
Content Type ◽  
Unique Data ◽  
Credit Associations ◽  
Free Model ◽  
Savings And Credit Associations ◽  
Financing And Investment ◽  
Credit Association

Purpose The emerging markets have been witnessing a remarkable revival of rotating savings and credit associations (ROSCAs) serving as alternative informal financing and investment platforms, also known as savings-based finance (SBF) in Turkey. The purpose of this study is to present the SBF model mathematically, analyse the performance of the SBF sector and propose a new Sharīʿah-compliant SBF model for the acquisition of durables. Design/methodology/approach The paper thoroughly reviews the concept and practice of ROSCA across the globe, mathematically models and empirically analyses the performance of Turkish SBF companies using a unique data set. Findings The study formulates a two-person SBF model and proposes a Mudarabah-Wakalah hybrid model with a new investment feature. It is found that the concept of ROSCA is being operationalized in 105 countries across the globe under different names with slight business model modifications. The research also reveals that the demand for financing of durables in Turkey significantly increased in recent years with the demand for housing is twice greater compared to vehicles. Most importantly, a strong significant inter- and intra-comovement is observed between these durables implying that the success of the sector in one segment has attracted the customers to other SBF products. It shows that the SBF institutions can effectively serve as the alternative financing houses for pooling savings and financing the durables, and they have strong potential to capture a larger financial market share in Turkey and even globally. Originality/value The study constructs mathematical models and proposes a new investment wing to an existing SBF wealth fund.

Digitalization and Growth of Small Businesses

2019 ◽  
pp. 142-159
Author(s):  
Indira Ananth ◽  
Dananjayan Madhava Priya
Keyword(s):  
Small Businesses ◽  
Service Providers ◽  
Point Of View ◽  
Payment Systems ◽  
Working Capital ◽  
Point Of Sale ◽  
Primary Focus ◽  
Credit Worthiness ◽  
To Receive ◽  
Capital Payment

On November 8, 2016, Government of India declared demonetization of all Rs. 500/- and Rs.1000/- currency notes towards a cashless society and create a digital India. The point of sale (PoS) and prepaid instruments are the most popular systems currently installed by merchants and service providers for receiving payments from customers. The primary focus of the study is to understand the adaptability, affordability, acceptability, and sustainability of the payments system as seen from the point of view of small merchants. A total of 221 responses were collected in Chennai. Results show that cash remains the most preferred mode for business. It is required for the working capital, payment of employee remuneration, wages, and others. With regards to the use of payment systems such as POS and prepaid instruments, awareness needs to be created of the benefits in having non-cash transactions. Improving credit worthiness and eligibility to receive loans from banks is one such benefit which would convince the merchants. However, too many systems could confuse the merchants and customers.

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