Effects of Bank Credit Access on the Productivity of Small and Medium Manufacturing Enterprises Evidence from Ethiopia

Abstract

The productivity of enterprises in low income countries like Ethiopia is insignificant and very low. This low productivity feature is even more common among Small and Medium Enterprises. This paper present the effects of access to bank credit on productivity of small and medium enterprises. The study makes use of the 2008/9 large and medium enterprises manufacturing survey data collected by the Central Statistical Authority (CSA) of Ethiopia and 2011 enterprises survey collected by World Bank respectively. The study is designed as a combination of descriptive and analytic research. Descriptive part of the study mainly rely on 2011 enterprises survey from World Bank while the analytic part is derived from 2008/9 Large and Medium Manufacturing Survey data in which a sample of 1294 enterprises are drawn from a list of over 2172 SMEs. The study identified the type and size of enterprises that is more likely responsive for access to bank credit and examined the link between SMEs productivity and use of bank credit. Above all, this paper opens the door for future research in this area.

Keywords: bank credit; enterprises; large and medium; productivity; SMEs