Stephen Korutaro Nkundabanyanga|Denis M Kasozi|Irene Nalukenge|Venancio Tauringana
Lending terms, financial literacy and formal credit accessibility
Makerere University|Makerere University|Makerere University|Bournemouth University
purpose purpose paper investigate relationship commercial bank lending terms financial literacy access formal credit small medium enterprises smes designmethodologyapproach crosssectional study authors surveyed 384 business owners managers smes uganda authors applied confirmatory factor analysis reduce number factors identify important elements capture commercial lending terms financial literacy access formal credit authors put forward tested two hypotheses relating significance relationship perceived commercial bank lending terms financial literacy access formal credit using structural equation modelling analysis moment structures 18 findings results suggest positive significant relationship perceived commercial bank lending terms financial literacy access formal credit moreover anova results serendipitously show access formal credit varies type business turnover however collateral loan repayment periods observed variables commercial bank lending terms significant observed variable commercial bank lending terms interest rates together financial literacy explains 31 per cent variances access formal credit smes uganda research limitationsimplications study limited sme firms registered operating kampala uganda possible results applicable firms uganda nevertheless findings implications commercial banks wishing improve turnover microlending schemes practical implications efforts stakeholders improve financial literacy smes owners managers must matched favourable interest rates access formal credit enhanced social implications findings also implications governments aiming improving access finance overcome income inequality problems also improve growth originalityvalue results provide initial evidence aggregate explanatory power interest rates financial literacy criterion variable access formal credit smes