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Exploring the Roots of Small and Medium Enterprise Financing Issues in Myanmar

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  • Ei Ei Thein
  • Atsushi Niigata
  • Kazuo Inaba

Abstract

Financial constraints are one of the top significant barriers for the growth and survivals of small and medium enterprises (SMEs). This study focuses on the causes of the SME financing issues in Myanmar before the covid-19 period from both demand side (SMEs) and supply side (banks). The study conducts a comparative analysis of SME financing between Myanmar and other ASEAN countries, as well as that of SMEs in comparison to large enterprises (LEs) within Myanmar. It utilizes firm-level data from the World Bank’s Business Environment and Enterprise Performance Survey (2014-2017) and country-level financial data from the Global Financial Development Database and Doing Business Survey (2010-2019) across eight ASEAN countries. The findings reveal that both Myanmar’s SMEs and its banking sector have internal weaknesses that hinder SME financing. Myanmar’s SMEs show weaknesses in key areas such as information and communication technology (ICT) skills, the use of audited financial statements, and export capabilities. Despite these shortcomings, Myanmar SMEs, particularly in the manufacturing sector, demonstrate growth potential in employment and innovation, like ASEAN SMEs. On the supply side, Myanmar’s banking sector shows inefficiencies, including high market concentration, low market stability, limited credit creation, and weak contract enforcement. These factors exacerbate collateral requirements for SMEs, further impeding their access to bank loans. As a results, Myanmar’s SMEs face more serious collateral challenges and lower financing opportunities than their ASEAN counterparts. To improve SME financing in Myanmar, policies must address the weaknesses on both the demand and supply sides.

Suggested Citation

  • Ei Ei Thein & Atsushi Niigata & Kazuo Inaba, 2025. "Exploring the Roots of Small and Medium Enterprise Financing Issues in Myanmar," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 17(3), pages 1-58, March.
    • Handle: RePEc:ibn:ijefaa:v:17:y:2025:i:3:p:58
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    References listed on IDEAS

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    3. Ei Ei Thein & Atsushi Niigata & Kazuo Inaba, 2024. "Concentrated bank market and SMEs’ collateral issues: a study of the firms of developing Asian countries," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 13(1), pages 1-19, December.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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