• ISSN: 2010-023X (Print)
    • Abbreviated Title: Int. J. Trade, Economics and Financ.
    • Frequency: Quaterly
    • DOI: 10.18178/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Managing Editor: Ms. Shira. W. Lu
    • Abstracting/ Indexing:  Crossref, CNKI, EBSCO

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IJTEF 2024 Vol.15(2): 57-60
DOI: 10.18178/ijtef.2024.15.2.770

Role of Debt Financing on SMEs’ Financial Performance in Papua New Guinea

Viswanadham Nadiminti 1, Matthew Kuusa 1 and E. Moses2
1. Department of Business Studies, The Papua New Guinea University of Technology, Lae, Papua New Guinea
2. Research Scholar, DBS, PNGUOT, Papua New Guinea
Email: vishwanadham.nadiminti@pnguot.ac.pg (V.N.)
*Corresponding author

Manuscript received January 8, 2024; revised February 16, 2024, accepted March 29, 2024; published April 29, 2024.

Abstract—The business produces products and provides facilities that contribute towards the GDP which help to extend the level of economic growth and create employment opportunities. Despite businesses carrying out vital parts of the expansion of finance, their activities were dragged down due to the unavailability of acceptable finance for day-to-day activities. The objective of the paper is to observe every connection linking the level of loan finance and financial performance among small medium enterprises in Papua New Guinea. The study focused on those businesses with greater than 3 or less than hundred and fifty employees waged, with extreme borrowing of one and a half million Kinas and a yearly income of more than one hundred thousand Kinas, were formally registered small medium enterprises in Papua New Guinea. The study was based on a survey prior to 279 official entrepreneurs and 130 casual entrepreneurs throughout the countryside and the city zones. Based on the survey, respondents from SMEs with problems having access to finance were ranked second, and difficulty dealing with banks ranked fifth among the top 10 obstacles that they have. Since Papua New Guinea is a developing country, small medium enterprises operations have relied on trade credit. The study concludes that debt financing plays a critical role in small medium enterprises financial performance to ensure growth and profitability in Papua New Guinea. Certainly, there was a helpful connection between trade credit and the firm's sound financial performance.

Keywords—GDP, debt financing, informal sector, formal sector SMEs, trade credit

Cite: Viswanadham Nadiminti, Matthew Kuusa, and E. Moses, "Role of Debt Financing on SMEs’ Financial Performance in Papua New Guinea," International Journal of Trade, Economics and Finance vol.15, no.2, pp. 57-60, 2024.

Copyright © 2024 by the authors. This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).

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