Enterprise Formation by Pooling: The Case of Ghana

December 28, 2013 Posted by admin

Charles Andoh and Daniel Quaye
Department of Finance, University of Ghana Business School, Legon, Accra, Ghana
Department of Marketing and Customer Management, University of Ghana Business School, Accra, Ghana.

Abstract
The study examines the formation of an enterprise through the pooling of the resources of a group of individuals over a period of time, as opposed to the conventional approach of seeking institutional loans. Mathematical models and/or mathematical expressions/formulas are developed for the managements of the pooled funds under a general case and under some special cases. The developments of most of the mathematical expressions/formulas are based on the developments and proofs of some propositions. Mathematical analysis for determining the sustainability or viability of the enterprise or pooling arrangement is presented. Many of the models are illustrated using audited data from the largest shopping mall in Ghana. Some illustrations are also done using some hypothetical data. The illustrations done with the real world and the hypothetical data show that enterprise formation by pooling is a good and viable source of funding for the establishments of small-and medium-scale enterprises.

Keywords: acquisition period, Andoh’s inequality, crowd funding, honesty test inequality, strain, shadow amount.

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