Credit risk management, pricing strategies and performance of micro and small enterprises in the Cape Coast Metropolis

Abstract

The purpose of the study was to investigate credit risk management and pricing strategies of Micro and Small Enterprises (MSEs), and their influence on the enterprises’ performance at Cape Coast Metropolis (CCM). The descriptive survey design was adopted for the study. A sample size of 179 was used for the study. The snowball sampling technique was used to select the 179 respondents who were made up of owners/managers and account/finance staff of the various MSEs in the metropolis. The instrument used in collecting data was questionnaire. The data were analysed using both descriptive and inferential statistics. The study revealed that owners/managers and account/finance staff of the various MSEs in CCM view credit risk management and pricing strategies of their enterprises in positive terms. Also, credit risk management and pricing strategies have a significant influence on MSEs’ performance in the long run. However, pricing strategies influence MSEs’ performance more than credit risk management strategies. Based on the findings, the study recommends that the supervision and management of credit risk in MSEs should not be vested on only the owners/managers but rather a three-member committee should be formed to take care of that. Also, MSEs should put in place effective measures to assess the most effective pricing strategy in order to reduce product costs and thus increase performance whenever such a strategy is used. They should also adopt ways to implement their pricing strategies better compared to competitor MSEs.