Factors associated with small and medium enterprise financing: a study from Bangladesh

Rozina Akther ()
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Rozina Akther: National English School Chittagong (NESC)

Journal of Global Entrepreneurship Research, 2022, vol. 12, issue 1, 265-277

Abstract: Abstract The study’s principal objective was to identify problems associated with small and medium enterprise (SME) financing facing the commercial banks in Bangladesh in SME financing appraisals, decisions, disbursement, and monitoring of SME loans. Opinions from 54 respondents of eight sample commercial banks were collected using a 5-point Likert scale questionnaire. A varimax-rotated factor analysis was conducted using 23 problem variables related to SME financing. The magnitude of the hardship associated with SME financing was identified by exploring the weighted mean score. Accounting and Policy Factor, Credit Operational Factor, and Credit Performance-related Factor were ranked higher than Operational Inefficiency Factor and Constraints to the access of SME financing factor. The result suggested that the commercial banks tend to rely upon the high-ranking factors of the SME firms to select their potential borrower. In order to address SME financing issues and ensure the balanced growth of SMEs in Bangladesh, some policies and strategic initiatives have been recommended for commercial banks, the government, and SMEs based on the findings of the present study.

Keywords: SME financing; Commercial banks; Lending decision (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s40497-022-00324-2

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