This study examined the influence of trade credit and debt finance structure on the growth of SMEs in Rwanda guided by two specific objectives; to investigate the influence of trade credit finance structure on the growth of small and medium manufacturing enterprises in Rwanda and to evaluate the influence of debt finance structure on the growth of small and medium manufacturing enterprises in Rwanda. The study used mixed research design for collecting, analyzing and integrating data using a target population of all the 868 small and medium manufacturing enterprises registered with Rwanda Development Board. Stratified random sampling technique was used to draw a sample size of 273 SMEs. Close-ended questionnaires were used in data collection and data was analyzed by way of Statistical Package for Social Science (SPSS) to generate descriptive statistics. Multiple regression analysis was used to explore the relationship between trade credit, debt finance and growth of small and medium size manufacturing enterprises in Rwanda. Analysis of variance (ANOVA) was utilized to test the significance of the model. Results of R2 indicted the goodness fit of the regression model. Study findings show that trade credit finance structure has a positive and significant effect on growth of small and medium manufacturing enterprise in Rwanda while results on debt finance structure were found to be insignificant. Based on these findings, the study recommends that stakeholders should ensure availability of various financing options for SMEs in Rwanda.
Akinyi, S. (2012). The effect of bank financing on the financial performance of small and medium sized enterprises in Nairobi County. Masters Thesis University of Nairobi.
AfDB annual report, (2013). Report by the board of governors of the African Development Bank and the African Development Fund covering the period from 1 January – December 31, 2013. Kigali, Rwanda. African Development Bank
Andries, A. M. Marcu, N., Oprea, F. & Tofan, M. ( 2018). Financial Infrastructure and Access to Finance for European SMEs. Sustainability, 10, PP 340.
Bancilhon, C., Karge, C. 7 Norton, T. (2018 ). Win-Win-Win: The Sustainable Supply Chain Finance Opportunity. BSR Report, Paris Available at:
https://www.bsr.org/reports/BSR_The_Sustainable_Supply_Chain_Finance_Opportunity.pdf.
Boissay, F. G. &. Gropp, R. (2007). Trade credit defaults and liquidity provision by firms. European Central Bank working paper series 753.
Cole, R. A. (2003). How did the financial crisis affect small business lending in the US? Driehaus College of Business DePaul University.
European Union, EU (2018). Annual Report on European SMEs 2014/2015; European Union: Luxembourg.
Cuñat, V. (2007). Trade credit: Suppliers as debt collectors and insurance providers. Review of Financial Studies 20(2) , pp. 491-527.
Elahi, M. & Dehdashti, M. (2011). Classification of Researches and Evolving a Consolidation Typology of Management Studies London. The Center for Innovations in Business and Management Practice.
Falkena, H., Bomber, R. & Llewellyn, D. (2001). Financial regulation in South Africa. Researgate.
Fatoki, O. O. &. Smit, V. A. (2011). Constraints to credit access by new SMEs in South Africa: A supply-side analysis. . African Journal of Business Management Vol. 5(4), pp. 1413-1425,.
Fosnacht, K. (2013 ). undergraduate coping with financial stress; a latent class analysis paper presented at the annual meeting of American College Personnel Association Las Vegas, NV.
Garikai, W. (2011). Ga Growth of SMEs in Developing Nations: Special Reference to AGOA.
Helsen, F. (2014). Collateral and Credit Rationing:The role of collateral in explaining and remediating the limited flow of credit to households and SMEs. European Credit Research Institute, ECRI Policy Brief No. 7 .
Hussain, T. S., Khan, U., Malik, Z. K. & Faheem, A. (2012). Constraints faced by Industry in Punjab, Pakistan. .
Jibran, S., Wajid, A., Iqbal, W. & Muhammad, T. M (2012). Pecking at Pecking Order Theory: Evidence from Pakistan’s Non-financial Sector Journal of competitiveness. 4, (4), PP (86-95).
Kwaak, T., Van der Graaf, A. & Van der Zeijden, P. (2016) Survey on the Access to Finance of EU enterprises, Analytical Report 2016. European Commission
Maimako, S. & Olayinka, M. (2011). Financing choices: A test of the pecking order theory.The Nigerian Accounting Horizon.
Malhotra, P. (2015). To what extent does the theory of credit rationing explain the phenomenon of microfinance? University of Auckland. Research gate Accessed on line at: file:///C:/Users/ffrrr/Downloads/Honours_Dissertation_Pawani_Malhotra.pdf.
Ministry of Trade and Commerce, MINECOM (2010) Small and Medium Enterprises (SMEs) Development policy, Kigali.
Mwangi, M. & Otieno, L. (2013 ). Commercial banks perception on the financing of small and medium enterprises (SME) A study of Western region Masters’ Thesis University of Nairobi.
Ndikubwimana, P. (2016). The role of financial institutions in promoting innovation of SMEs in Rwanda; An empirical review. British journal of Economics, Management and Trade 14(2): 2016, article n0. BJEMT.26746 ISSN: 2278-098X , 1-14.
OECD. (2006). Financing Innovative SMEs in a Global Economy, Istanbul Turkey 3-5 June. Organisation for Economic Cooperation and Development.
OECD. (2018). Financing SMEs and Entrepreneurs 2018: An OECD Scoreboard; OECD Publishing: Paris, France.
Rodriguez, F. S. (2016). Trade credit, the finial crisis and SME access to finance. Journal of Money, Credit and Bank
In-Text Citation: (Rubunda, Namusonge, & Oluoch, 2019)
To Cite this Article: Rubunda, E., Namusonge, G. S., & Oluoch, O. (2019). Trade Credit, Debt Finance Structure and Smes Growth in Rwanda. International Journal of Academic Research Business and Social Sciences, 9(6), 24–43.
Copyright: © 2019 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
