Information asymmetry and alternative financing for SMEs: Evidence from credit unions in Ghana

This study examines SME credit accessibility through the lens of Information Asymmetry Theory, focusing on the mediating roles of credit history and cash flow stability as financial transparency mechanisms. Data from 205 respondents across 88 credit unions in Ghana were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to examine relationships among key credit determinants. The study found that in addition to the direct associations, collateral availability, managerial experience, and local economic conditions exert positive and significant associations with SMEs’ credit accessibility through the financial transparency mechanisms, which suggest lower perceived lending uncertainty and higher likelihood of favorable lending outcomes. Unlike previous studies that treat credit history and cash flow as independent predictors, this study positions them as transmission mechanisms within cooperative lending environments, beyond reliance on traditional collateral-based assessments. The findings offer practical insights for SMEs, credit unions, and policymakers seeking to strengthen inclusive lending systems.