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Please rank each of the following sources of finance in terms of your perception of the risk in using them:
SOURCE OF FINANCE
Personal Savings Family Financing Trade Creditors Bank Loans External Equities Finance Lease
NOT RISKY
3 1 0 2 0 1
NEUTRAL
6 5 3 5 2 3
TOO RISKY
0 3 6 2 7 4
The majority of the participants ranked using personal savings, family financing and bank loans as neutral. Neutral in this case meant that the participant did not have any opinion on whether the source of capital was risky or not too risky.
Please rank each of the following sources of finance in terms of your perception of the risk in using them:
SOURCE OF FINANCE
Personal Savings Family Financing Trade Creditors Bank Loans External Equity Finance Lease
LESS PREFERRED
1 2 7 2 7 3
NEUTRAL
1 4 2 4 2 2
HIGHLY PREFERRED
7 3 0 3 0 2
Having indicated that six out of the nine participants regard trade creditors as the least preferred, this cm1 be clue to the fact they perceived it as being too risky. This is contradictory to the findings in
Michaelas et al. (1998) where the study found that participants preferred trade credit to bank loans. This further proves that the participants shy away from using equity as a source of finm1ce. Four out of the nine indicated that using bank loans was rather neutral. The reasons why they prefer the type of finance they indicated, is that it was the cheapest form of financing available and also easy to access.
Non behavioural factors
The non-behavioural factors that were considered or looked at in this research were the availability of funding, the firm size and the finance cost. The two most popular factors selected by the participants were availability and the finance cost. In a question which asked why they prefer the
FACTORS AFFECTING CAPITAL STRUCTURE DECISIONS: A SMALL BUSINESS PERSPECTIVE 190