THE IMPACT OF BUSINESS CLIMATE ON THE FINANCIAL PERFORMANCE OF SMALL AND MEDIUM SIZE ENTERPRISES IN CAMEROON

Abstract

This article had as objective to assess the impacts of business climate on the financial performance of small and medium size enterprises in Cameroon. Specifically, it had to assess the impacts of general infrastructure, access to financial credit as well as the modes of financial regulation on the financial performance of small and medium size enterprises in Cameroon. To attain this objective, we used of primary data collected directly from the field thanks to open questionnaires that were administered to both top and middle class managers of the small and medium size enterprises. A simple model developed by Gikonya (2011) was employed in the analysis of the collected information. In this model elements of business climate make up the independent variable and financial performance as the dependent variable. The Ordinary Least Square method (OLS) was used to test the relationship between the variables. The result obtain showed that there exist a positive relationship between business climate and the financial performance of small and medium size enterprises in Cameroon. This result suggest that small and medium size enterprises should constantly monitor the business climate and its constantly evolving components especially the development of general infrastructures and accessibility to credit facilities but should also consider other important factors such as modes of financial regulation, asset utilization, market part as well as life cycle of the enterprise as important determinants of the level of financial performance. Key words: Business climate, financial performance, small and medium size enterprises, financial profitability, turnover