The determinants of financial distress of SMEs in the southern regions of Morocco

Abstract

This article aims to identify and analyze the main determinants of financial distress among SMEs in the southern regions of Morocco. Using structural equation modeling (SEM), we studied the relationships between various factors, such as financial ratios, access to financing, financial management skills, financial innovation, and strategic and judicial interventions, and their impact on the financial performance of SMEs. Data were collected from surveys of 373 SMEs in the regions of Guelmim-Oued Noun, Laâyoune-Sakia El Hamra, and Dakhla-Oued Eddahab. The results show that unfavorable financial ratios increase the risk of financial distress, while access to financing, financial management skills, financial innovation, and strategic and judicial interventions have significant positive effects on the financial performance of SMEs. These findings highlight the importance of improving access to financing and financial management to strengthen the resilience of SMEs.

Keywords: Financial distress, SMEs, access to finance, Structural equation modeling (SEM), Financial management

Classification JEL: E6, B4

Paper type: Empirical Research