Role of Financial Institutions in the Growth of Micro and Small Enterprises in Dire Dawa Administration

Aregai W Gebriel

doi:10.7176/ejbm/13-5-05

Abstract

The target of this study was to research the role of financial institutions on the growth of micro and small enterprises in Dire Dawa Administration. the specific objectives of this study were; to determine the role of financial institutions, MFIs’ saving services on the growth of MSE in Dire Dawa Administration, to determine the role of monetary institutions, MFIs’ loan services on the growth of MSE in Dire Dawa Administration and to research the role of financial institutions, MFIs’ training services on the expansion of MSE in Dire Dawa Administration. These objectives sought to answer the subsequent questions: what is the role of financial institutions, MFIs’ saving services on the growth of MSE in Dire Dawa Administration? What is the role of financial institutions; MFIs’ loan services on the growth of MSE in Dire Dawa Administration? And, what's the role of financial institutions, MFIs’ training services on the growth of MSE in Dire Dawa Administration? The study adopted descriptive research design targeting a sample size of 245 MSE. Primary data was collected using structure questionnaires while secondary data was collected from relevant literature. The study used self-administered questionnaires to gather primary data from the respondents. Quantitative data was analyzed using descriptive statistics like frequencies, modes, means and standard deviations. Likert type data was analyzed using mode because the focus of discussion. Correlation and regression was conducted to work out the role of monetary institutions, MFIs’ on the expansion of MSE within the study area. The study findings revealed financial institutions; MFIs’ saving and loan services have positively and significantly influenced the growth of MSE in Dire Dawa Administration but the training services have not contributed positively. The study recommends there is need for MFIs and MSE stakeholders to return up with measures of addressing the poor performing training component of MFIs services in Dire Dawa Administration, Ethiopia. Keywords: Role, Micro Financial Institution, Micro and Small Enterprise, Growth DOI: 10.7176/EJBM/13-5-05 Publication date: March 31 st 2021

Highlights

Micro and Small Enterprises (MSE) and microfinance institutions are the main actors and contributors to the performance of an economy
The objective of this research was to assess the role of financial institutions on the growth of micro and small enterprises in Dire Dawa town
The study examines the statistical significance between financial institution services on the growth of micro and small enterprises

Summary

Introduction

Micro and Small Enterprises (MSE) and microfinance institutions are the main actors and contributors to the performance of an economy. MSE play a crucial role in developing the economy and in creating employment They are providing employment, income opportunities to people. According to ((Wolday, 2000) as cited in Gelfeto Gelassa Titta & Dr.Aravind Soudikar, 2015) they provide suitable financial and other services at low cost to meet the need of low income sections of the people and act as a sound medium of exchange and facilitate trading. They provide financial assistance to satisfy the various needs of enterprises. Common samples of monetary institutions are banks, insurance companies, credit Associations, microfinance, financial and economic firms

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