Drivers and Obstacles to Banking SMEs : The Role of Competition and the Institutional Framework
This paper studies the factors banks perceive as drivers and obstacles to financing small and medium enterprises (SMEs), focusing on the role of competition and the institutional framework. Using a survey of banks in Argentina and Chile, the paper...
| Main Authors: | , , |
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| Language: | English |
| Published: |
Washington, DC: World Bank
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2008/12/10063846/drivers-obstacles-banking-smes-role-competition-institutional-framework http://hdl.handle.net/10986/6306 |
| Summary: | This paper studies the factors banks
perceive as drivers and obstacles to financing small and
medium enterprises (SMEs), focusing on the role of
competition and the institutional framework. Using a survey
of banks in Argentina and Chile, the paper shows that,
despite alleged differences in the countries'
environments regarding rules, regulations, and ease of doing
business, SMEs have become a strategic segment for most
banks in both countries. In particular, banks have begun to
target SMEs due to the significant competition in the
corporate and retail sectors. They perceive the SMEs market
as highly profitable, large, and with good prospects.
Moreover, banks are developing coping mechanisms to overcome
the particular institutional obstacles present in each
country and to compete for SMEs. Banks' interest in
SMEs is not based on government programs, yet policy action
might help reduce the cost of providing financing,
especially long-term lending. |
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