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Formal, informal and semi-formal sources of finance: Is there any difference amongst Cameroonian small enterprises and medium enterprises?

Year 2015, Volume: 4 Issue: 2, 105 - 122, 01.12.2015

Guy Roland Kenmegnı Noumıgue

Abstract

Studies on the small and medium sized enterprises SMEs financing do not generally distinguish them. This study aims to compare the small enterprises SEs financing to those of medium enterprises MEs . Evidence from our analysis on forty-one SEs and forty seven MEs points the fact that bank loan and informal funding sources, effectively allow significant distinction amongst SEs and MEs in Cameroon. While the formal and semi formal intermediate funding overdraft, trade credit, and microcredit from Microfinance Institutions MFIs does not allow differentiating them. Consequently SEs financing sources are more informal than MEs financing sources. Thus, the effectiveness of economic policy for SMEs is subject to a distinction between them.

Keywords

Small enterprises Medium enterprises Formal financing Informal financing Cameroon .

References

  • Abdulsaleh, A. M., & Worthington, A. C. (2013), “Small and Medium-Sized Enterprises Financing: A Review of Literature”, International Journal of Business and Management, 8 (14), 36 – 54.
  • Abor, J. (2008), “Determinants of the Capital Structure of Ghanaian Firms”, AERC Research Paper 176, Nairobi.
  • Atupele, N. M. (2013), “Analysis of External Financing Use: A Study of Small and Medium Enterprises in Malawi?”, International Journal of Business and Management, 8 (7), 55-64.
  • Berger, A. & Udell, G. (1998), « The Economics of Small Business Finance: the Roles of Private Equity and Debt Markets in the Financial Growth Cycle », Journal of Banking and Finance, 22. 613-673.
  • Berlin M. (2003), “Trade Credit: Why Do Production Firms Act as Financial Intermediaries?”, Business Review – Federal Reserve Bank of Philadelphia, 3/5, 21- 28.
  • Cassar, G. (2004), “The Financing of Business Start-Ups”, Journal of Business Venturing, 19(2), 261-283.
  • Chittenden, F. Hall, G. & Hutchinson, P. (1996), “Small Firm Growth, Access to Capital Markets and Financial Structure: Review of Issues and an Empirical Investigation”, Small Business Economics, 8, 59–67.
  • COBAC (2002), Recueil des textes relatifs à l’exercice des activités de microfinance, Secrétariat Général de la COBAC, Yaoundé.
  • Colot, O. Croquet, M. & Pozniak, L. (2010), « Déterminants des choix de financement et profils de PME. », Journal of Small Business & Entrepreneurship, 23 (1), 97-115.
  • Degryse, H. Goeij (de), P. & Kappert, P. (2012), “The Impact of Firm and Industry Characteristics on Small Firms’ Capital Structure.”, Small Business Economics, 38 (4). 431-447.
  • Diamond, D. W. (1989), “Reputation Acquisition in Debt Markets”. Journal of Political Economy, 97(4), 828-862.
  • Dwight M. J. & Russell T., (1976), “Imperfection Information, Uncertainty, and Credit Rationing”, The Quarterly Journal of Economics, 90 (4), 651-666.
  • Fauré, Y.A. (1992), « Financement de la Petite et Moyenne Entreprise à Toumodi (Côte-d’Ivoire) : l’illusion informelle », Revue Internationale PME, 5 (3/4), 61-88.
  • Gnanounou, S.C. (1992), « L’épargne informelle et le financement de l’entreprise productive : référence spéciale aux tontines et à l’artisanat béninois », Revue International PME., ¾. 20-47.
  • Hernandez, E.M. (1997), Le management des entreprises africaines, l’Harmattan, Paris.
  • Issoufou, S. (1992), « Le phénomène tontinier au Burkina Faso : étude sur 69 cas », Revue International PME., ¾, 152-170
  • Jensen, M. & Meckling, W. (1976), “Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure”, Journal of Financial Economics, 3, 305–360.
  • Kenmegni, N. G. R. (2012), Analyse des Différences et Similitudes des Structures Financières des Petites Entreprises (P.E.) et Moyennes Entreprises (M.E.) au Cameroun, Rapport de Recherche n° 41/12, ICBE, Trust Africa.
  • Labie, M., Lelart M., & Montalieu T., (2010), « Microfinance : le temps de la maturité ? », Mondes en développement, 4 (152), 7-11. DOI 10.3917/med.152.0007.
  • Mandiefe, P. S., Menjo, B. F. & Tieguhong, J., (2015), “Effects of credit constraints on the productivity of small and medium-sized enterprises in Cameroon” Journal of Economics and International Finance, 7(9), 204-212.
  • Myers, S. C. (1977), “Determinants of Corporate Borrowing.” Journal of Financial Economics, 5(2), 147-175.
  • Myers, S. C. (1984), « The Capital Structure Puzzle», The Journal of Finance, 39(3). 575–592.
  • NIS (2009), Recensement Général des Entreprises : Rapport Principal des résultats, Yaoundé.
  • Ou, C., & Haynes, G. W. (2006), “Acquisition of Additional Equity Capital by Small Firms – Findings from the National Survey of Small Business Finances.” Small Business Economics, 27(2), 157-168.
  • Petersen, M. A. & Rajan, R. G. (1994), «The Benefits of Lending Relationships: Evidence from Small Business Data. », The Journal of Finance, 49(1), 3–37.
  • Ross, S.A. (1977), «The Determination of Financial Structure: The Incentive Signalling Approach», Bell Journal of Economics, (Printemps), 23-40.
  • Schreiner M. (2001), “Informal Finance and the Design of Microfinance”, Development in Practice, 11 (5), 637-640
  • Seck F. F. (2009), « Panorama de la relation banques/institutions de microfinance à travers le monde », Revue Tiers Monde, 3 (199), 485-500.
  • Servet, J.-M. (dir.), (1995), Epargne et liens sociaux, études comparées d’informalités financières, Paris, AEF/ Montchrestien.
  • Sogorb-Mira, F. (2005), “How SME Uniqueness Affects Capital Structure: Evidence From a 1994–1998 Spanish Data Panel.”, Small Business Economics, 25, 447–457.
  • Um-Ngouem, M. T. (1996), Financement bancaire et gestion des petites et moyennes entreprises camerounaises, Thèse de Doctorat, Université de MontesquieuBordeaux IV.
  • Van Caneghem, T. & Van Campenhout, G. (2012), “Quantity and Quality of Information and SME Financial Structure.”, Small Business Economics, 39 (2), 341- 358.
  • Wamba, H. & Niyonsaba, S. E. (2014), « Le rôle du capital social en matière d’octroi de crédits bancaires aux PME : une étude à partir de l’expérience camerounaise », Revue Internationale PME, 27 (2), 39-62.
  • Wu, J., Song, J., & Zeng, C. (2008). « An Empirical Evidence of Small Business Financing in China”, Management Research News, 31(12), 959-975. www.enterprisesurveys.org

Formal, informal and semi-formal sources of finance: Is there any difference amongst Cameroonian small enterprises and medium enterprises?

Year 2015, Volume: 4 Issue: 2, 105 - 122, 01.12.2015

Guy Roland Kenmegnı Noumıgue

Abstract

References

  • Abdulsaleh, A. M., & Worthington, A. C. (2013), “Small and Medium-Sized Enterprises Financing: A Review of Literature”, International Journal of Business and Management, 8 (14), 36 – 54.
  • Abor, J. (2008), “Determinants of the Capital Structure of Ghanaian Firms”, AERC Research Paper 176, Nairobi.
  • Atupele, N. M. (2013), “Analysis of External Financing Use: A Study of Small and Medium Enterprises in Malawi?”, International Journal of Business and Management, 8 (7), 55-64.
  • Berger, A. & Udell, G. (1998), « The Economics of Small Business Finance: the Roles of Private Equity and Debt Markets in the Financial Growth Cycle », Journal of Banking and Finance, 22. 613-673.
  • Berlin M. (2003), “Trade Credit: Why Do Production Firms Act as Financial Intermediaries?”, Business Review – Federal Reserve Bank of Philadelphia, 3/5, 21- 28.
  • Cassar, G. (2004), “The Financing of Business Start-Ups”, Journal of Business Venturing, 19(2), 261-283.
  • Chittenden, F. Hall, G. & Hutchinson, P. (1996), “Small Firm Growth, Access to Capital Markets and Financial Structure: Review of Issues and an Empirical Investigation”, Small Business Economics, 8, 59–67.
  • COBAC (2002), Recueil des textes relatifs à l’exercice des activités de microfinance, Secrétariat Général de la COBAC, Yaoundé.
  • Colot, O. Croquet, M. & Pozniak, L. (2010), « Déterminants des choix de financement et profils de PME. », Journal of Small Business & Entrepreneurship, 23 (1), 97-115.
  • Degryse, H. Goeij (de), P. & Kappert, P. (2012), “The Impact of Firm and Industry Characteristics on Small Firms’ Capital Structure.”, Small Business Economics, 38 (4). 431-447.
  • Diamond, D. W. (1989), “Reputation Acquisition in Debt Markets”. Journal of Political Economy, 97(4), 828-862.
  • Dwight M. J. & Russell T., (1976), “Imperfection Information, Uncertainty, and Credit Rationing”, The Quarterly Journal of Economics, 90 (4), 651-666.
  • Fauré, Y.A. (1992), « Financement de la Petite et Moyenne Entreprise à Toumodi (Côte-d’Ivoire) : l’illusion informelle », Revue Internationale PME, 5 (3/4), 61-88.
  • Gnanounou, S.C. (1992), « L’épargne informelle et le financement de l’entreprise productive : référence spéciale aux tontines et à l’artisanat béninois », Revue International PME., ¾. 20-47.
  • Hernandez, E.M. (1997), Le management des entreprises africaines, l’Harmattan, Paris.
  • Issoufou, S. (1992), « Le phénomène tontinier au Burkina Faso : étude sur 69 cas », Revue International PME., ¾, 152-170
  • Jensen, M. & Meckling, W. (1976), “Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure”, Journal of Financial Economics, 3, 305–360.
  • Kenmegni, N. G. R. (2012), Analyse des Différences et Similitudes des Structures Financières des Petites Entreprises (P.E.) et Moyennes Entreprises (M.E.) au Cameroun, Rapport de Recherche n° 41/12, ICBE, Trust Africa.
  • Labie, M., Lelart M., & Montalieu T., (2010), « Microfinance : le temps de la maturité ? », Mondes en développement, 4 (152), 7-11. DOI 10.3917/med.152.0007.
  • Mandiefe, P. S., Menjo, B. F. & Tieguhong, J., (2015), “Effects of credit constraints on the productivity of small and medium-sized enterprises in Cameroon” Journal of Economics and International Finance, 7(9), 204-212.
  • Myers, S. C. (1977), “Determinants of Corporate Borrowing.” Journal of Financial Economics, 5(2), 147-175.
  • Myers, S. C. (1984), « The Capital Structure Puzzle», The Journal of Finance, 39(3). 575–592.
  • NIS (2009), Recensement Général des Entreprises : Rapport Principal des résultats, Yaoundé.
  • Ou, C., & Haynes, G. W. (2006), “Acquisition of Additional Equity Capital by Small Firms – Findings from the National Survey of Small Business Finances.” Small Business Economics, 27(2), 157-168.
  • Petersen, M. A. & Rajan, R. G. (1994), «The Benefits of Lending Relationships: Evidence from Small Business Data. », The Journal of Finance, 49(1), 3–37.
  • Ross, S.A. (1977), «The Determination of Financial Structure: The Incentive Signalling Approach», Bell Journal of Economics, (Printemps), 23-40.
  • Schreiner M. (2001), “Informal Finance and the Design of Microfinance”, Development in Practice, 11 (5), 637-640
  • Seck F. F. (2009), « Panorama de la relation banques/institutions de microfinance à travers le monde », Revue Tiers Monde, 3 (199), 485-500.
  • Servet, J.-M. (dir.), (1995), Epargne et liens sociaux, études comparées d’informalités financières, Paris, AEF/ Montchrestien.
  • Sogorb-Mira, F. (2005), “How SME Uniqueness Affects Capital Structure: Evidence From a 1994–1998 Spanish Data Panel.”, Small Business Economics, 25, 447–457.
  • Um-Ngouem, M. T. (1996), Financement bancaire et gestion des petites et moyennes entreprises camerounaises, Thèse de Doctorat, Université de MontesquieuBordeaux IV.
  • Van Caneghem, T. & Van Campenhout, G. (2012), “Quantity and Quality of Information and SME Financial Structure.”, Small Business Economics, 39 (2), 341- 358.
  • Wamba, H. & Niyonsaba, S. E. (2014), « Le rôle du capital social en matière d’octroi de crédits bancaires aux PME : une étude à partir de l’expérience camerounaise », Revue Internationale PME, 27 (2), 39-62.
  • Wu, J., Song, J., & Zeng, C. (2008). « An Empirical Evidence of Small Business Financing in China”, Management Research News, 31(12), 959-975. www.enterprisesurveys.org
There are 34 citations in total.

Details

Primary Language English
Journal Section Research Article
Authors

Guy Roland Kenmegnı Noumıgue This is me

Publication Date December 1, 2015
Published in Issue Year 2015 Volume: 4 Issue: 2

Cite

APA Noumıgue, G. R. K. (2015). Formal, informal and semi-formal sources of finance: Is there any difference amongst Cameroonian small enterprises and medium enterprises?. Journal of Entrepreneurship and Innovation Management, 4(2), 105-122.