Record Details

Formal financial institutions financing of immigrant small and medium enterprises in South Africa

Acta Commercii

Field Value
Title Formal financial institutions financing of immigrant small and medium enterprises in South Africa
Creator Asah, Francis T. Louw, Lynette
Subject — formal financial institutions; supply-side; credit; immigrant; SME
Description Orientation: Small and medium enterprises (SMEs) owned by immigrants in developing economies, such as South Africa, tend to trust formal financial institutions (FFIs) for financial support.Research purpose: Even though immigrant SMEs create opportunities that have important implications for the South African economy; less than 5% of them can access credit from FFIs. This study, therefore, explores the accessibility of credit from FFIs to immigrant SMEs from a supply-side perspective.Motivation for the study: Research studies on improving financing from FFIs to immigrant SMEs will help to boost the survival of immigrant SMEs and promote economic development in South Africa.Research design, approach and method: This qualitative research design used an interpretivistic research paradigm to achieve the research objectives. Data were collected from 16 purposively selected participants and analysed using the five-step process of content analysis outlined by Terre Blanche, Durrheim and Kelly.Main findings: The findings revealed that FFIs are uninterested and biased against considering financing immigrant SMEs and tend to charge them higher interest rates. Collateral, equity contribution and the possession of a South African permanent resident permit with a South African ID are the most important requirements that impact the willingness of FFIs to finance immigrant SMEs.Practical/managerial implications: Implications for the financial institutions in policy development were provided.Contribution/value-add: This research study highlights the requirements and the challenges faced by immigrant SMEs in accessing credit from FFIs. The use of qualitative research design further contributed to the literature on FFIs financing of immigrant SMEs.
Publisher AOSIS
Date 2021-08-31
Type info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion — Survey/Interview
Format text/html application/epub+zip text/xml application/pdf
Identifier 10.4102/ac.v21i1.953
Source Acta Commercii; Vol 21, No 1 (2021); 10 pages 1684-1999 2413-1903
Language eng
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Rights Copyright (c) 2021 Francis T. Asah, Lynette Louw