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This paper investigates factors, external and internal to enterprises, which affect their participation in credit market. Using data from 35 firms and 20 credit institutions collected through structured questionnaire, results reveal that more firms obtain loan from informal sources, and many do not apply for loan from formal institutions due to inadequate collateral, difficult processing procedures and high interest rate. Prohibit analysis indicates that income and educational level of firm owners and value of initial capital reduce the likelihood of firm's demand for credit. Credit institutions lending policies account for 81% (adjusted R² = 0.81) of the amount of loan advanced by institutions.


(Af. J. of Finance and Management: 2003 11(2): 121-132)