The Effect Of Leasing Competence And Lease Structure On Performance Of Smes: The Case Of Burayu Town Of Oromia Regional State

Abstract

The general objective of the study is to assess leasing competence, lease structure and perceived performance of SMES: case of Burayu town of Oromia regional state. In this study, the researcher used descriptive and explanatory research design. Primary sources of data collected from selected sample managers of SMEs, experts and officials of SME office. Burayu town is chosen by purposive sampling technique. The researcher selected all 200 SMEs SMEs located in Burayu Town, by census method. Further, Burayu town SME all experts and official selected by census sampling, due to key informants. Closed-ended questionnaires along with interviews used for the purpose of data collection. The demographic profiles analyzed using simple statistical tools percentages. Descriptive statistics (Mean and Standard Deviations) of the respondent scores also used to compute to analyze respondents view. Further, Pearson Product Moment Correlation Coefficient and multiple regression analysis were conducted. The study found that profits and cash flows generated from sales are adequate to cover the costs incurred in generation of the revenue. The perceived firm performance of SMEs is adequate to cover the costs incurred in generation of the revenue. Regarding lease competence of SME the study concludes that majority SMEs managers engage in preparation of cash flow plans and participation in lease negotiations and reviews. Further, SMEs managers engage in long term planning. The study indicated that leasing competence makes the strongest contribution to explaining the dependent variable. However, lease structure of SMEs has no significant effect on lease performance of SMEs. In general, it is recommended that lessors (banks) and providers of SME are expected to strengthen initiatives and invest more in improving the leasing structure of SME.