Determinants of financing choices in SMEs: Owner-manager profile, information asymmetry, and governance mechanisms

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Abstract

This study examines the determinants of financing choices among Moroccan small and medium-sized enterprises (SMEs), focusing on the role of owner-manager characteristics and internal governance mechanisms in an underexplored emerging economy context, in line with prior research highlighting the influence of governance structures and managerial attributes on financing behaviour and firm outcomes (Ismaeel & Soliman, 2022; Akwaa-Sekyi et al., 2024). Based on survey data from 127 Moroccan SMEs and using an ordinal logistic regression approach, the analysis investigates preferences for internal financing, bank financing, equity market access, and alternative financing instruments. The findings show that digitalisation and financial transparency shape perceptions of self-financing, while bank financing depends primarily on governance quality (particularly the presence of an audit committee) and owner-manager financial literacy. Equity market access is driven by governance quality and educational attainment, whereas alternative financing relies on governance credibility and specialised financial knowledge, with non-digitalised SMEs exhibiting a greater reliance on such instruments. Overall, the results suggest that SME financing decisions in Morocco are influenced less by purely financial rationality than by strategic, institutional, and cognitive factors, offering original evidence and relevant implications for policymakers and practitioners.

Keywords: Moroccan SMEs, Financing, Owner-Manager, Information Asymmetry, Governance Mechanisms, Pecking Order Theory, Ordinal Logistic Regression

Authors’ individual contribution: Conceptualization — Z.B.D. and A.C.; Methodology — N.I. and M.G.; Validation — Z.B.D.; Formal Analysis — I.I. and A.C.; Investigation — Z.B.D.; Resources — Z.B.D. and N.I.; Data Curation — I.I. and M.G.; Writing — Z.B.D., A.C., N.I., and M.G.; Supervision — Z.B.D. and A.C.; Project Administration — Z.B.D. and I.I.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: D82, G21, G32, M21

Received: 23.09.2025
Revised: 29.12.2025; 13.01.2026; 02.03.2026
Accepted: 01.04.2026
Published online: 03.04.2026

How to cite this paper: Ben Darkawi, Z., Charif, A., Idrissi, N., Gadmi, M., & Iaataren, I. (2026). Determinants of financing choices in SMEs: Owner-manager profile, information asymmetry, and governance mechanisms. Journal of Governance and Regulation, 15(2), 221–232. https://doi.org/10.22495/jgrv15i2art19