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Student Project | Finance | South Sudan | Volume 12 Issue 10, October 2023

Evaluation of the Influence of Cost of Credit on the Financial Performance of SMEs in Juba County, South Sudan

Athiek Parach Peter Ajak | Njoroge Munyua

Abstract: The importance of Small and medium-sized enterprises in South Sudan is at a high level due to their contribution in offering employment, spurring economic growth and social good, as well as empowering the youthful population of South Sudan to gain economic relelvance. However, the level of cost of credit has a negative impact on this noble sector as the players in the SME sector are largely viewed as high risk borrowers by the mainstream financial sector, thus levying higher interest charges to borrowers from this sector. For the SME sector to grow the level of cost of credit to players in this sector has to be addressed. The main purpose of the study was to evaluate the influence of cost of credit on the financial performance of SMEs in Juba County, South Sudan. The study sought to determine how the cost of credit affects the financial performance of SMEs in Juba, South Sudan. The study was limited to Juba County, South Sudan. The research objectives were anchored on three theories; The Pecking-Order Theory, The Credit Rationing Theory and The Microfinance Theory. A descriptive research strategy was used in this research. A population of 30,000 SMEs in Juba County of South Sudan was taergetted. Juba County was selected for this study using a purposive sampling approach. Descriptive and inferential statistical methods were employed for analyzing the sample's characteristics. This included utilizing measures like frequencies, percentiles, as well as the mean and standard deviation. Inferential techniques such as Pearson correlation and multiple regression analysis were applied to explore the connection between independent and dependent variables. The regression model focused onthe significance of the cost of credit to financial performance. Itis recommended that lenders adopt a flexible approach towards determination of the cost of credit to SMEs.

Keywords: Collateral Requirement,Cost of Credit,Enterprise and Financial Performance

Edition: Volume 12 Issue 10, October 2023,

Pages: 1450 - 1452