Sourcing Working Capital Finance: The Case of Mauritian SMEs

For almost three decades, small firm finance hascaptured the attention of academicians and policy makersacross the world. Despite the government efforts to bridgethe ‘financial gap’ yet the small to medium-sizedenterprises(SMEs) rated access to finance, especiallyworking capital finance (WCF) as a main hindrance tomove along the business life cycle. This study is an attemptto identify the main factors affecting the Mauritian SMEsaccess to WCF. The methodology used for this studyinvolves the collection of primary data through acomprehensive survey questionnaire administered to theowner manager of firms operating in six main industrygroups of the Mauritian manufacturing sector. Theresearch findings provided some new evidences as regardsto the difficulties which firms faced while procuringworking capital. They are often constrained by their lackof financial knowledge and their inability to formulategood business plan. Access to finance is also constrained bythe market conditions, where the seasonality of the markethas a greater incidence on the working capitalrequirements. Further, firms experiencing significantinformation costs have difficulty getting access totraditional sources of finance. There was also evidence tosupport that financially constrained firms suffer from latepayment problem, have longer production cycle andoperate in seasonal markets. The findings of the study willbe useful to financial institutions funding SME and policymakers. The study finds working capital is the majorconcern for the SME and its timely availability is criticalfor the success of ventures. In many cases, SMEs have nooption but to extend or provide longer credit period and itneeds not be seen negatively for funding. This paperprovides evidence on the difficulties which Mauritianmanufacturing SMEs faced while procuring WCF andadds to the growing literature on SMEs financing

Applying the Support Vector Machine for Testing Pricing Inefficiency on the Stock Exchange of Mauritius

A popular Machine Learning Technique called the Support Vector Machine (SVM) is adopted on the Stock Exchange of Mauritius (SEM) to determine if stock market returns are predictable based on information from past prices, allowing arbitrage opportunities for abnormal profit generation. The serial correlation test, used as benchmark, and the SVM technique show evidence that previous information on share prices as well as the indicators constructed are useful in predicting share price movements. The implications of the study are that investors have the prospect of adopting speculative strategies and profits from trading based on information and advanced techniques and models are possible

Disruptive innovation in small and medium enterprises : a key factors checklist

Small and Medium Enterprises (SMEs) operate in an environment where their existence are impacted by information technology – an attribute of Society 5.0, adoption of technologies and resource scarcity. As a key contributor to countries’ economy, SMEs need to innovate, create social businesses, and develop new business models to stand the test of time. Hence, SMEs must focus on key aspects that will empower them to leapfrog the traditional pathways of development and innovate. The purpose of this study is to present SMEs with a disruptive innovation key factor checklist based on an investigation of key disruptive innovation factors from the literature. The disruptive innovation key factor checklist was developed by analyzing a corpus of 137 papers through an automated content analysis process. Ten themes and 38 concepts were identified that informed the categorization to the Technology-Organization-Environment framework and the creation of the disruptive innovation key factor checklist. To create an instantiation of the checklist, we mapped the key factors checklist to an SME case study. By considering the checklist, SMEs are guided to optimize their innovation strategy, stakeholder engagement, technology adoption and innovation impact.https://easychair.org/publications/EPiC/Computingam2024InformaticsSDG-09: Industry, innovation and infrastructur

Factors affecting the adoption of formal Accounting systems by SMEs

Abstract Small to medium-sized enterprises' (SMEs) poor performance is often ascribed to external factors such as burdensome character of the legal framework, limited scope to penetrate the export market and access to finance. However, internal factors such as marketing, operation and in particular accounting services may be equally responsible to such state of affairs. This study therefore attempts to analyse the importance attached to formal accounting systems among the small to medium-sized Mauritian manufacturing firms operating in six main industry groups. The research findings are based on a comprehensive survey of the financial and working capital management practices of 141 SMEs. Additional rigour to the research findings was possible through the use of 12 mini case studies

Global Financial market tribulations-upshots on major Banks costs and profits - A Mauritian perspective

This paper appraises the upshots on Mauritian Banks following recent tribulations in global financial markets using data for the period 2000-2011. Using data from Banks' annual reports, a sample of 9 banks that existed during this period is taken to investigate the impact of recent tribulations in global financial markets on the costs and profits of the banks. Plain OLS results suggest that financial crisis has had no impact on the performance of the domestic banking sector as shown by the insignificance of the financial dummy variable. To have a more efficient and reliable estimate, the model has been tested using GMM. The GMM results also confirm the insignificance of the financial crisis dummy, which indicates that the Mauritian banking sector is very resilient to external economic and financial shock

Working Capital Financing Preferences: The case of Mauritian Manufacturing SMEs

This paper investigates the approach of small- to medium-sized Mauritian manufacturing firms to working capital finance using a survey-based approach and case studies. Financing has been cited as one of the most common problems faced by SMEs and is often viewed as one of their main barriers to growth. Using parametric and non-parametric techniques, the important variables that affect the demand for financing are examined. Interestingly, it is observed that the sample firms adopted more informal sources of financing and networking to meet their financing requirements. The financing preferences of the firms were predominantly short-term and there was conclusive evidence that they were reluctant to move down the pecking order for fear of losing control of their businesses. The findings confirmed that internal resources, non-bank sources and short-term debt represent the main sources of financing. The research findings provided some new evidence in support of the different approaches to financing working capital. These SMEs used more informal sources such as shareholder loans and bootstrap finance. These results indirectly suggest that firms experience significant information costs that prevent them from gaining access to the traditional sources of financing. The findings of the study will be useful to the financial institutions that fund SMEs and to policy makers

An Econometric Analysis regarding the path of Non Performing Loans- A Panel Data analysis from Mauritian Banks and Implications for the Banking Industry

The present study pertains to unravelling the internal (bank specific) and external (macroeconomic) determinants of nonperforming loans in Mauritius using annual report data from a panel of 10 existing banks and macroeconomic data for the period 2000 to 2012. The model used in the present instance comprises of a vector of bank specific and macro economic variables which include the inflation rate, lending interest rates, growth of the construction sector and tourism sector as well as global variables such as the Euro zones GDP growth. The model is tested both in a static and dynamic framework. Four estimation techniques are considered, viz Fixed Effects, differenced GMM, System GMM and Random coefficient estimation. The results indicate that, notwithstanding there are many significant factors influencing NPL, the most critical elements nevertheless remain declines in the construction sector and the rise in cross border loans. Interestingly, the study provides important policy insights which centres on the improvement of credit concentration guidelines as well as the modification of the MCIB reportin