| dc.description.abstract | Over the years, medium sized enterprises have been shown as the main driving forces for
promoting economic growth in any nation as they encouraged entrepreneurship and wealth
creation, alleviated poverty and increased productivity levels in a nation, not only in
developed countries but also in developing countries and emerging economies (Sacerdoti,
2005).
The purpose of the research was to examine the effect of credit financing on the financial
performance of medium scale enterprises, case of selected medium scale enterprises in
Katwe – Butego Division in Masaka Municipality. Credit financing was the independent
variable and the dependent variable was financial performance of medium scale enterprises.
The study was based on three objectives; to examine the effect of loans on the financial
performance of medium scale enterprises, to examine the effect of trade credit on financial
performance of medium scale enterprises, to establish the relationship between credit
financing and financial performance of medium scale enterprises, and the research questions
were formulated from the specific objectives to the study.
The Researcher used a descriptive research design to undertake the study with the help of
quantitative approaches. The Researcher had a sample size of 42 respondents and 10 medium
enterprises in Katwe – Butego Division that were contacted. The Researcher obtained primary
data through field survey as well as secondary data from libraries, journals, text books and
unpublished research reports.
The Researcher used only questionnaires for collecting data from the field. Data collected
from the field was collected, interpreted and analyzed using Statistical Package for Social
Scientists (SPSS) version 16.0 to generate the frequency tables, pie and bar charts for which
data analysis and discussions were made.
From the field findings, it was found out that medium scale enterprises use loans, trade credit
and bank overdraft in financing their business operations despite the high interest rates and
administrative costs attached when acquiring loans and credit supplies from suppliers.
The study therefore, concluded that; the profits made by medium scale enterprises were greatly
encroached on by the high interest rate charges on loans and bank overdrafts thus resulted into
poor financial performance of such businesses.
Lastly, the Researcher recommended that the central bank should set policies and procedures to
prevent barriers that inhibit potential owners and managers of medium scale enterprises from
accessing credit facilities from financial and other credit institutions in order create a
conducive environment for MSEs’ growth and expansion as well as opening up opportunities
for jobs thus enhancing economic growth. | en_US |
