The Role of SMEs in the Economy: Analyzing the Financial Performance of Algerian SMEs
Journal Title: Oblik i finansi - Year 2024, Vol 1, Issue 3
Abstract
Small and medium-sized enterprises (SMEs) represent a major pillar of the Algerian economy, accounting for 99.9% of businesses and employing over 3.3 million people. Despite their importance, these enterprises face complex challenges that affect their financial performance, measured by indicators such as return on assets (ROA). The study explores this performance's internal and external determinants, focusing on factors such as liquidity, debt levels, company size, and macroeconomic variables like GDP growth and inflation. Using the panel data method, we analyzed a sample of 40 SMEs over a five-year period (2018 to 2022). The results show that excessive liquidity, while seemingly prudent, has a negative effect on SME performance, as it limits investment opportunities. Similarly, short-term and long-term debt are associated with reduced profitability, contradicting some economic theories that view debt as a sign of good management. The limited access to credit often forces Algerian SMEs to rely on short-term financing, increasing their financial risks. In contrast, economic growth positively affects SME performance by boosting demand for their products and services. However, inflation has a negative effect, eroding profit margins due to rising operating costs. Thus, improving a company's performance is possible if the entity can create the conditions necessary for its survival and deploy the resources and logistics needed to achieve the desired objectives while aligning strategies across various activities to effectively implement its management policies. These research findings provide valuable insights for business leaders and policymakers, emphasizing the need for tailored strategies to maximize the financial performance of SMEs by considering these various factors.
Authors and Affiliations
Hanane Abdelmalek & Amira Benachour & Lamine Tarhlissia & Aymen Adjal
Mortgage Market Analysis: Domestic and International Experience
In the conditions of an economic crisis, the activation of economic activity through mortgage lending becomes crucial, and the study of the development of the mortgage market in the world is necessary for a comprehensive...
Мультиплікативні ефекти в системі адміністрування податків суб’єктів агробізнесу
Метою статті є формування методичного та практичного підходів до оцінки фіскальних ефектів системи адміністрування податків суб’єктів агробізнесу. Розкрито методику оцінки фіскальних ефектів системи адміністрування подат...
The Effect of Clean Energy Financial Investment on Carbon Reduction
Accounting and finance are intricately intertwined with the global quest for environmental sustainability by applying accounting and finance tools for carbon reduction initiatives. Clean energy financial investment is on...
The Impact of Gender Diversity, CEO Experience and Financial Leverage on Financial Performance of Companies in the Transport and Hospitality Industry in Indonesia, Thailand and Malaysia for Period 2015-2020
The Covid-19 pandemic has made financial performance in a company undergo several changes. Activities of some companies have decreased, increased, or even tended to be unstable when compared to before and after the pande...
Інжиніринговий бухгалтерський облік: практичний аспект
Стаття присвячена удосконаленню методичних підходів до використання нового економічного механізму бухгалтерського інжинірингу в практичній діяльності українських підприємств. Розкрито передумови і причини виникнення бухг...