The Impact of Commercial Banks Loans on the Performance of SMEs: A Case Study of Jalalabad, Afghanistan
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Abstract
Small and medium enterprises are the back bone of economy and play an important role in boasting the economy of any countries. Since SMEs are small and medium businesses many entrepreneurs face the constrain of rising funds to operate their businesses effectively. On the other hand, Banks are financial institution and are the major sources of financing to small and medium enterprises. Difficulty raised for SMEs to have access to short and long term loan of banking sectors. current study is design to show the impact of commercial Banks loan on the performance of small and medium enterprises. In which Depended variable is SMEs performance and measured through return on Assets (ROA). While independent variable is bank loans which are measure through two proxies that is Short term loan (STL) and long term loan (LTL). descriptive research design was used by collecting primary data through questionnaire from different SMEs located in Jalalabad Afghanistan. Out of 360 population 189 SMEs were selected for data collection purpose. Data were analysis through Statistical Package for Social Sciences 25. Apart from descriptive statistics, reliability test of questionnaire and person correlation, hypothesis were tested through multiple linear regression model, in which R square indicate that 65 percent of the variation in dependent variables is explain by independent variables, while p value 0.000 shows that at least one of the independent variables has significant impact on dependent variable. The inner model that is regression coefficient both STL and LTL show positive and significant association with ROA that is SMEs performance. Coefficient result are 0.214, 0.216 and p value are 0.001, 0.000 respectively for STL and LTL, suggested that both hypothesis H1 and H2 are Accepted and concluded that commercial bank loans both short and long term has significant and positive impact on small and medium enterprise performance.
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