The Impact of Credit Risk Interest Rate on Small and Medium Enterprises (SMES) Growth in Dili, Timor-Leste

Abstract

This study aims to analyse the impact of credit risk and interest rates on the growth of small and medium enterprises (SMEs) in Dili, Timor-Leste. This study used quantitative questionnaire-based method with a sample of 171 SMEs in Dili, Timor-Leste. Data analysis was conducted using multiple regressions with hypothesis test using t and f values. The results show a positive and significant relationship for credit risk and interest rate on SMEs growth in Dili, Timor-Leste. The result shows that when banks and financial institutions implement credit risk effectively, company growth is increased. On the other hand, the interest rate did not have any impact on the growth of the Small and Medium Enterprises (SMC). This may be because small and medium enterprises (SMEs) do not pay attention to the Bank interest rate when they ask for credit.