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Sourcing Working Capital Finance: The Case of Mauritian SMEs

GSTF Journal on Business Review

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Title Sourcing Working Capital Finance: The Case of Mauritian SMEs
 
Creator Padachi, Kesseven
 
Description 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.
 
Publisher GSTF Journal on Business Review (GBR)
 
Date 2017-12-27
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://dl6.globalstf.org/index.php/gbr/article/view/687
 
Source GSTF Journal on Business Review (GBR); Vol 2 No 3 (2013): Journal on Business Review (GBR)
2251-2888
2251-2888
 
Language eng
 
Relation http://dl6.globalstf.org/index.php/gbr/article/view/687/631
 
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