Social Capital’s Impact on Informal Financial Accessibility among Incubated Small and Medium Entrepreneurs in Tanzania

Abstract

Social capital is expected to contribute positively to entrepreneurs’ access to finance. The study in this
article investigates the impact of incubated entrepreneurs’ social capital on their informal financial
accessibility. Social capital was measured by benefits emanating from bonding, bridging and linking
social networks. The study uses dependent variables such as informal financial accessibility and
independent variables such as bonding social capital, bridging social capital, and linking social
capital, employing relevant information from 117 Tanzanian incubated entrepreneurs. Using SPSS
Version 20, multiple regression analysis was employed to test the impact of bonding social capital,
bridging social capital and linking social capital on access to informal finance. The findings suggest
that bonding and bridging social capitals have a positive impact on access to informal finance.
Linking social capital has insignificant effects on access to informal finance. This paper suggests
policymakers and other stakeholders should focus on building and improving bonding and bridging
social networks of incubated small and medium entrepreneurs to increase their informal financial
accessibility.