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.
HF5001 Business, HD Industries. Land use. Labor, HF Commerce, HG Finance
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