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Abstract
Small and medium enterprises (SMEs) play a vibrant role in socio economic development of a country by sustaining economic growth, employment creation and poverty reduction. But accessibility to bank credit is a key challenge faced by the sMe firms. The main objective of the study is to examine the determinants of SME financing in Bangladesh. By analysis of 350 SME survey data and 50 credit officer, internal capital, collateral, financial statement and profitability are the determinants of SME financing. The data used in the study was at a single point in time. Due to the absence of central database, the work of data collection was very difficult.
Keywords: SMEs, Determinants, Financing
INTRODUCTION
Small and Medium Enterprises (SMEs) have been playing a vital role in encouraging economic growth, poverty diminution and prospective contribution to the overall industry through creation of employment, attaining millennium development goals and women empowerment [1]. It requires lower energy, infrastructure facilities. The environmental risk is also lower. In fiscal year 2017-18, SMEs contribute to GDP more than 23%. The number of SMEs is about a million in Bangladesh. SMEs offered about 80% jobs are in the industries sector [2]. The total number of jobs offered by SME firms is about 78 lakh. Among the SME firms, more than ninety percent are small and seven percent medium [3]. SMEs used local unutilized resources.
The performance of this sector has an overwhelming impact on major macroeconomic objectives like human resources development and food security. In fact, the SMEs are renowned as engines of economic growth. To attain high and continued economic growth, a triggering force is obligatory to exit from widespread scarcity and socio-economic deprivation. The entrepreneurs can cooperate a larger role in economic development, but they are held back to get access to financing from the financial institutions. Several studies on SMEs and bank financing have given the center of attention due to the tremendous significance of SMEs to the world economies [4-8]. Ayyagari and team showed that SMEs are only in charge for the designer of about 60 percent of employment in the manufacturing sector in their analysis of 76 developed and developing countries [5].
Research question
SMEs are measured as an engine of development. SME firms represent a large...