Locally available sources of finance in the local manufacturing industry : an evaluation

Abstract

Sources of finance are needed throughout the whole life of an enterprise and the choice of these sources of finance depend on many factors such as type of business, success of firm and state of the economy. There are three general sources of finance for a company being: contribution by the owners or shareholders; the retention of profits; and other people's money or borrowing from banks. The problem of maintaining liquidity is a crucial one and by using the most appropriate sources in the circumstances and the best combination of funds, the business can have a healthy going concern. Finance is required for fixed assets and working capital. Throughout this dissertation, investigation is carried out to find which sources of finance are available for the Maltese Manufacturing Industry. This study has revealed that although enterprises relay on bank finance, it is not the mostly used by manufacturers. Even though local firms seem to be relatively aware of the sources of finance available, the use is restricted to some specific sources; others are used by a small number of enterprises and the remainder ones are never used. The study has also prepared a number of possible recommendations for the manufacturers to consider when choosing a source of finance and by taking into consideration the awareness and use of alternative financing sources.