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Obstacles to bank financing of micro and small enterprises: empirical evidence from the Pacific with some policy implications

Author

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  • Parmendra Sharma

    (Department of Accounting, Finance and Economics, Griffith University, Nathan Campus, 170 Kessels Road, Brisbane, Queensland 4111, Australia.)

  • Neelesh Gounder

    (Department of Accounting, Finance and Economics, Griffith University, Nathan Campus, 170 Kessels Road, Brisbane, Queensland 4111, Australia.)

Abstract

In recognizing on one hand the importance of the micro and small enterprise (MSE) sector for the growth and development of economies in the Pacific subregion and on the other, the financing constraints of the sector, the authors surveyed a group of MSEs in a Pacific island country and found that the sector may be particularly constrained by bank interest rates, fees and charges, and collateral requirements. This situation holds implications for policy, and the authors propose an initiative led by the banking sector to improve the situation. Keeping in mind an economy’s specific financial, regulatory, economic and other structures and circumstances, voluntary or mandatory, it seems as if direct or indirect bank involvement appears vital. The implications for economic growth and development are considerable.

Suggested Citation

  • Parmendra Sharma & Neelesh Gounder, 2012. "Obstacles to bank financing of micro and small enterprises: empirical evidence from the Pacific with some policy implications," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 19(2), pages 49-75, December.
    • Handle: RePEc:unt:jnapdj:v:19:y:2012:i:2:p:49-75
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    References listed on IDEAS

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    Cited by:

    1. Patrick Mabuza, 2018. "The Potential Role of PPPs in Developing a Sustainable SME Sector in Developing Countries: A South African Experience," Journal of Economics and Behavioral Studies, AMH International, vol. 9(6), pages 67-89.

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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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