The effect of commercial bank credit on the output of small and medium enterprises in Cameroon : empirical evidence from 1980-2014

Abstract EN

The objective of this paper is to empirically examine the impact of commercial bank credit on the performance of Small and Medium Size Enterprises (SMEs) in Cameroon between 1980 and 2014.

The SMEs output is approximated by wholesale and retail trade output as a component of the GDP.

The study employed Ordinary Least Square (OLS) method to estimate the multiple regression model.

The results revealed that stock of capital and labor force have a positive impact on Cameroonian SMEs performance.

The results also revealed that commercial bank credit and real interest rate have a negative and significant impact on the performance of SMEs in Cameroon.

Therefore, the study suggests that the Cameroonian government should improve the business environment by provision of necessary infrastructure which will lower the cost of borrowing, and then induce the growth of SMEs in order to achieve the vision 2035.