The status of bank lending to SMES in the Middle East and North Africa region : the results of a joint survey of the Union of Arab Bank and the World Bank
AbstractAmong the principal constraints for SME lending is the lack of SME transparency, poor credit information from credit registries and bureaus, and weak creditor rights. If constraints can be addressed, lending can potentially reach bank targets of 21 percent. State banks still play an important role in financing SMEs in the MENA region, but they use less sophisticated risk management systems than private banks. On another hand, credit guarantee schemes are a popular form of support to SME finance in the region, and are associated with higher levels of SME lending. The paper concludes that MENA policy makers should prioritize improvements in financial infrastructure, including greater coverage and depth of credit bureaus, improvements in the collateral regime (especially for movable assets), and increased competition between banks and also non-banks. Weaknesses in insolvency regimes and credit reporting systems should also be alleviated. Direct policy interventions through public banks, guarantee schemes, lower reserve requirements and subsidized lending and other measures have played a role in compensating for MENA's weak financial infrastructure, but more sustainable structural solutions are needed.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 5607.
Date of creation: 01 Mar 2011
Date of revision:
Banks&Banking Reform; Access to Finance; Debt Markets; Financial Intermediation; Bankruptcy and Resolution of Financial Distress;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-02 (All new papers)
- NEP-ARA-2011-04-02 (MENA - Middle East & North Africa)
- NEP-BAN-2011-04-02 (Banking)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- de la Torre, Augusto & Martínez Pería, María Soledad & Schmukler, Sergio L., 2010.
"Bank involvement with SMEs: Beyond relationship lending,"
Journal of Banking & Finance, Elsevier,
Elsevier, vol. 34(9), pages 2280-2293, September.
- de la Torre, Augusto & Soledad Martinez Peria, Maria & Schmukler , Sergio L., 2008. "Bank involvement with SMEs : beyond relationship lending," Policy Research Working Paper Series 4649, The World Bank.
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