The Impact of Financing Problems on the Performance of Small and Medium-Sized Enterprises in Libya

Abstract

This study aims to examine the impact of financing problems on the financial performance of small and medium-sized enterprises (SMEs) in Libya and to identify the major financing challenges they face, with the objective of developing recommendations and solutions that may improve their access to finance and support sustainable performance. The study adopted a descriptive-analytical approach. A total of 450 questionnaires were distributed to a group of small and medium-sized enterprises in Libya. Following the examination and screening of the returned questionnaires, 403 were deemed suitable for statistical analysis, while 47 were excluded. Data were collected using a three-point Likert scale, and the analysis employed the arithmetic mean, standard deviation, and measures of reliability and validity. The findings indicate that interest rate problems represented the highest-rated dimension of financing problems, with a mean score of 1.6112, whereas self-financing problems recorded the lowest mean score of 1.2239. The overall mean score for the financial performance of SMEs was 2.7109, with liquidity and profitability recording mean scores of 2.7146 and 2.6832, respectively. The findings also indicate that difficulties in collecting receivables, weaknesses in inventory management, and limited access to banking facilities affect the liquidity and financial flexibility of SMEs. The study recommends focusing on reducing operating costs, improving credit risk and inventory management, increasing the flexibility of banking policies, supporting loan guarantee institutions, and promoting Islamic financing alternatives.