IDEAS home Printed from https://ideas.repec.org/p/wbk/wbkrpb/120333.html
   My bibliography  Save this paper

Addressing the SME finance problem

Author

Listed:
  • Abraham,Facundo
  • Schmukler,Sergio L.
  • Abraham,Facundo
  • Schmukler,Sergio L.

Abstract

Although SMEs provide employment to a large share of the labor force in developed and developing countries, they receive limited external funding compared to large firms and face a financing gap. This problem is not specific to developing countries; SMEs in developed countries also suffer from a similar shortfall in financing. According to the World Bank Enterprise Survey, SMEs are less likely to have a formal bank loan or other lines of credit compared to large firms. The International Finance Corporation (IFC) estimates that in aggregate across developing regions, the credit gap to formal SMEs ranged from $900 to $1,100 billion in 2011.1 These values represented between 26 and 32 percent of total credit to formal SMEs. This policy brief explores two questions. Why are SMEs more financially constrained than large firms? What are some feasible and innovative solutions to help SMEs obtain better access to finance? Understanding the SME finance problem is critical because difficulties in obtaining finance can hamper the ability of established smaller firms to invest and grow and of new firms to launch operations, hindering overall growth in economic activity and employment.

Suggested Citation

  • Abraham,Facundo & Schmukler,Sergio L. & Abraham,Facundo & Schmukler,Sergio L., 2017. "Addressing the SME finance problem," Research and Policy Briefs 120333, The World Bank.
    • Handle: RePEc:wbk:wbkrpb:120333
    as

    Download full text from publisher

    File URL: http://documents.worldbank.org/curated/en/809191507620842321/pdf/Addressing-the-SME-finance-problem.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sardar Muhammad Usman & Farasat Ali Shah Bukhari & Huiwei You & Daniel Badulescu & Darie Gavrilut, 2020. "The Effect and Impact of Signals on Investing Decisions in Reward-Based Crowdfunding: A Comparative Study of China and the United Kingdom," JRFM, MDPI, vol. 13(12), pages 1-20, December.
    2. Cusato, Antonio & Castillo, José Luis & IDB Invest, 2023. "Access to Credit and the Expansion of Broadband Internet in Peru," IDB Publications (Working Papers) 12922, Inter-American Development Bank.
    3. Maria Kukurba & Aneta Ewa Waszkiewicz & Mariusz Salwin & Andrzej Kraslawski, 2021. "Co-Created Values in Crowdfunding for Sustainable Development of Enterprises," Sustainability, MDPI, vol. 13(16), pages 1-21, August.
    4. Alsagr, Naif & Cumming, Douglas J. & Davis, Justin G. & Sewaid, Ahmed, 2023. "Geopolitical risk and crowdfunding performance," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 85(C).
    5. Asma Kanwal & Nwakego Eyisi, 2023. "Income Inequality and Frontend Innovation: Evidence from Frontier Markets," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 255-286, March.
    6. Basha, Shabeen Afsar & Bennasr, Hamdi & Goaied, Mohamed, 2023. "Financial literacy, financial development, and leverage of small firms," International Review of Financial Analysis, Elsevier, vol. 86(C).
    7. Verma, Nishant Kumar & Chatterjee, Ashish K., 2023. "Process flexibility in the presence of product modularity: Does modularity help?," International Journal of Production Economics, Elsevier, vol. 256(C).
    8. Thorsten Beck & Natalie Kessler, 2023. "The SME Finance Gap in The European Union," RSCAS Working Papers 2023/07, European University Institute.
    9. Sriyono & Sarwendah Biduri & Bayu Proyogi, 2021. "Acceleration of performance recovery and competitiveness through non-banking financing in SMEs based on green economy: impact of Covid-19 pandemic," Journal of Innovation and Entrepreneurship, Springer, vol. 10(1), pages 1-10, December.
    10. Caselli, Stefano & Corbetta, Guido & Cucinelli, Doriana & Rossolini, Monica, 2021. "A survival analysis of public guaranteed loans: Does financial intermediary matter?," Journal of Financial Stability, Elsevier, vol. 54(C).
    11. Panagiota Papadimitri & Fotios Pasiouras & Menelaos Tasiou, 2021. "Do National Differences in Social Capital and Corporate Ethical Behaviour Perceptions Influence the Use of Collateral? Cross-Country Evidence," Journal of Business Ethics, Springer, vol. 172(4), pages 765-784, September.
    12. Godfrey Adda, 2020. "Financial Management Practices and Growth of Small and Medium-Scale Enterprises: The case of Kassena-Nankana West District," Research in Business and Management, Macrothink Institute, vol. 7(2), pages 39-58, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbkrpb:120333. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.