Secure property rights and access to small enterprises' (SEs) credit: a comparative study of Ghana and England

Small enterprises are a major source of livelihood for most people in the developing world. Their ability to grow is however, undermined by credit constraints. This has often been attributed to the lack of registered property ownership which is argued to make property insecure and unacceptable to lenders. Though several studies have been conducted on the relationship between property registration and credit access, the focus is usually on the demand side mainly involving households and the agricultural sector. Furthermore, no studies have compared the developed and developing countries. Finally, the exact nature of , the credit constraint amongst businesses in countries such as Ghana for instance is not known. This research therefore, set out to conduct a demand-side study into the nature of the credit constraint amongst small businesses in Ghana and a supply-side investigation of the influence of registration on small businesses access to credit. The multi methodology was deemed most suitable approach for the investigation of the objectives of the study. The quantitative approach was first used to investigate the objectives. Part of the initial findings was validated through the quantitative approach whilst the other part was validated through the qualitative approach. The results show amongst other things that the existing credit constraint is almost entirely a supply side problem. The supply side study showed that in Ghana, unregistered property is not eligible for use as collateral but this is applicable only to the universal banks (UBs) and not the microfinance institutions (MFIs). That said, the possession of registered property title was not found to influence the loan terms that businesses are offered neither was there evidence that it guarantees access to credit. Even though in England the eligibility of property was not dependent on whether it is registered or not, lenders also did agree that the possession of registered property does not guarantee credit access neither does it influence the credit terms businesses are offered. It was concluded that since majority of small businesses in Ghana seek credit from MFIs, the lack of registered property titles does not constitute a major barrier to credit access. The I main barriers to credit access identified are the poor repayment ability and high risk of default amongst others

Secure property right as a determinant of SME’s access to formal credit in Ghana: Dynamics between Micro Finance Institutions and Universal Banks

Does registered land title help to improve tenure security and enhance one’s chances of securing a loan from formal financial institutions? This question continues to sharply divide opinions among academics, policy-makers and international development partners. The long running debate on the subject of ‘Property in the Commons’, which serves as the ideological origin of what has become known as ‘Washington Consensus’ in contemporary times claims that there is positive correlation between the possession of registered land title and access to credit. However, this has often received considerable rebuttals. Even if the ‘Washington Consensus’ is accepted, the argument is still laced with some fundamental difficulty because it inherently assumes and treats financial institutions as a homogenous class of business. Yet financial institutions exhibit greater diversity in their operations and decision-making process. This paper attempts to contribute towards developing improved understanding between the ‘secure land title and access to credit relationship’ by disaggregating financial institutions into Micro-finance and Universal Banks (UBs) and examining what role secure land title play in granting credit from the perspectives of these two categories of financial institutions. To achieve this, field level investigations were conducted amongst officials of both Micro-finance Institutions (MFIs) and UBs in Ghana using structured questionnaires. A total of 200 questionnaires – 100 each to MFI and Universal Banks were administered of which a response rate of 51 and 57 was, respectively, achieved. The data were analysed using various non-parametric statistics. The study amongst other things established that UBs and MFIs differ in their opinions on how important secure titles are in the lending process and the nature of the influence they can exert on the final lending decision. It was established that both categories of lenders do regard secure titles as important but whether or not it will influence their decision to accept a given landed property as collateral varies across lender types

Adoption of financial innovation in the Ghanaian banking industry

This century has been full of innovations: new technologies, new products, new services and a plethora of new industries have emerged. Yet the call for innovation in business, especially in financial services, has never been more intense. Although research on this topic exists, there is no empirical evidence regarding the critical factors influencing customer adoption of electronic banking innovation in Ghana’s banking industry. The aim of this article is therefore to investigate the factors influencing the adoption of financial innovation in Ghana’s banking industry. Surveys were conducted involving 405 clients of the six major banks in the country. Using logistical regression, the results amongst other things show that innovation attributes such as lack of complexity, compatibility and perceived usefulness provided by financial innovation, increase the likelihood of e-banking adoption. In light of these findings, the study recommends that banks should focus on designing both useful and easy-to-use e-banking products that will attract potential and existing customers.Keywords: e-banking, financial innovation, Ghana, technology, West Afric

Doing Business and Inclusive Human Development in Sub-Saharan Africa

Purpose- This study examines how doing business affects inclusive human development in 48 sub-Saharan Africa for the period 2000-2012. Design/methodology/approach- The measurement of inclusive human development encompasses both absolute pro-poor and relative pro-poor concepts of inclusive development. Three doing business variables are used, namely: the number of start-up procedures required to register a business; time required to start a business; and time to prepare and pay taxes. The empirical evidence is based on Fixed Effects and Generalised Method of Moments regressions. Findings- The findings show that increasing constraints to the doing of business have a negative effect on inclusive human development. Originality/value- The study is timely and very relevant to the post-2015 Sustainable Development agenda for two fundamental reasons: (i) Exclusive development is a critical policy syndrome in Africa because about 50% of countries in the continent did not attain the MDG extreme poverty target despite enjoying more than two decades of growth resurgence. (ii) Growth in Africa is primarily driven by large extractive industries and with the population of the continent expected to double in about 30 years, scholarship on entrepreneurship for inclusive development is very welcome. This is essentially because studies have shown that the increase in unemployment (resulting from the underlying demographic change) would be accommodated by the private sector, not the public sector

Are Competitive Microfinance Services Worth Regulating? Evidence from Sub-Saharan Africa

In recent years there is increasing appetite for regulation of financial institutions after the 2008 financial crisis. Policy questions such as whether competitive micro finance institution (MFI) requires strong regulation to reduce, for example credit risk or competition and regulation operate in the opposite direction, which each tends to dampen the effect of the other, is an empirical issue that this paper provide answers based on data on Sub-Saharan Africa (SSA) for the period 1995 to 2015, utilizing panel data approaches. Finding from the study indicates that competition increases credit risk among MFIs in SSA, which regulation helps reduce such behaviour. The effect of regulation on credit risk is conditional on the level of competition, at the first percentile of competition; regulation does not reduce credit risk behaviour of MFIs, but does at competition level above the 25th percentile. Regulation on the other hand does not affect operational risk at any level of competition