Financial resource building effort, financial resource availability, financial literacy, and growth of Small and Medium Enterprises in Ghana.

The study provides a critical examination of the inter-relationship between financial resource building effort and other key variables and SMEs growth in Ghana. Despite the immense contributions of SMEs to the socio-economic development among various countries. However, not much has been accomplished along their growth and it had been unsuccessful and daunting. Additionally, their mortality rate is extra ordinary high among developing countrie especially in Ghana. This study places much emphasis on issues relating to finance and SMEs growth, since most studies have reported that financial constraint is the major factor affecting SMEs growth in Ghana. Issues of finance and SMEs in developing countries have dominated the academic research field at various policy levels. However, limited empirical studies have been conducted to ascertain the effect of SMEs financial resource building effort on their growth.This study main objective is to provide better understanding on the relationship between financial resource building effort and other important variables such as financial resource availability, financial literacy, and SMEs growth in Ghana. Grounded by Attention-Based View (ABV) and Resourced-Based View (RBV) theories, this study developed a conceptual framework by decomposing financial resource building effort through retained profit, personal savings, family and friends, supplier’s credit, and bank loan as firm key sources of finance. The study is primarily based on survey questionnaires on 274 service SMEs in Ghana’s private sector, which were randomly selected from three regions in Ghana as participants. Structural Equation Modelling (SEM) is the main statistical method used in this study. Results of this study indicate that moderate level of financial resource building effort is made by SMEs in Ghana. However, it is greatly directed towards reliance on retained profit and bank loan. Moreover, the study findings reveal that financial resource building effort has positive and significant direct and indirect effect on SMEs growth through financial resource availability. While financial resource availability has positive and significant direct effect on SMEs growth. Furthermore, findings indicate that the positive effect of financial resource availability on SMEs growth is strengthened by high levels of firm’s financial literacy. As predicted, financial resource availability serves as specific mediated variable that explains the association between financial resource building effort and SMEs growth. On the basis of the study findings, the researcher is able to put forward theoretical and practical implications as well as suggestions and recommendations to enhance the growth of SMEs in Ghana.