Access to Finance

This paper presents evidence about the impact on school enrollment of a program in Ecuador that gives cash transfers to the 40 percent poorest families. The evaluation design consists of a randomized experiment for families around the first quintile of the poverty index and of a regression discontinuity design for families around the second quintile of this index, which is the program's eligibility threshold. This allows us to compare results from two different credible identification methods, and to investigate whether the impact varies with families' poverty level.

Using data for 91 large banks from 45 countries, this paper finds few differences in the extent, type, and pricing of SME loans across foreign, private, and government-owned banks, even though different bank ownership types apply different lending technologies and have different organizational structures. Instead, we find significant differences across banks in developed and developing countries, driven by differences in the economic, institutional, and legal environment, as opposed to by differences in lending technologies and organizational structures. Finally, the link between lending technologies, organizational structures, and SME financing is not consistent with the conventional view that SME lending is based on "relationship lending".

Johnson et al. (2002. American Economic Review 92 (5), 1335-1356) examine the relative importance of property rights and external finance in several Eastern European countries. They find property rights to be overwhelmingly important, while external finance explains little of firm reinvestment. McMillan and Woodruff (2002. Journal of Economic Perspectives 16 (3), 153-170) further conjecture that as transition moves along, market-supporting (financial) institutions should become more important. This paper reexamines those issues in the context of China in 2002, when the transition had moved far. We also find that secure property rights are a significant predictor of firm reinvestment. However, in line with McMillan and Woodruff, we find that access to external finance in the form of bank loans is also associated with more reinvestment. Following Acemoglu and Johnson (2003. Unbundling institutions. Unpublished working paper 9934, National Bureau of Economic Research,

High-tech innovative SMEs’ development plays crucial role in economic growth of every country. It creates new work places and infrastructure, motivates people for creating new ideas. At the same time, SMEs still face with a huge number of problems in the business performance. The purposes of the research are: to define main barriers for high-tech SMEs’ development in the 4th industrial revolution era (4IR); to work out recommendations for policy-makers towards intensification of SMEs’ potential.
For this purpose, the authors reviewed studies devoted to the SMEs’ innovative development and revealed that main barriers of SMEs’ development are related to inefficient government support in this sphere. In order to work out recommendations for Ukrainian policy-makers in the area of SMEs’ development, the authors conducted a survey of local high-tech SMEs and on the basis of SWOT-analysis distinguished the main directions for their further improvement. Finally, a set of recommendations for improving SMEs’ environment in Ukraine, taking into consideration the challenges of the 4th IR, was developed.

There is a substantial literature on the relationship between gender and access to finance. However, most studies have been concerned with access to debt finance. More recently, the focus of this research has broadened to examine women and venture capital. This article extends the focus further by examining the role of women in the business angel market, which is more important than the formal venture capital market in terms of both the number of ventures supported and total capital flows. Based on a detailed analysis of business angels in the U.K., the study concludes that women investors who are active in the market differ from their male counterparts in only limited respects. Future research into women business angels, and the possible existence of gender differences, needs to be based on more fully elaborated standpoint epistemologies that focus on the experience of the woman angel investor per se, and center on the examination of the role of homophily, social capital, networking, and competition in investment behavior.

This paper presents recent research on access to finance by small and medium-size enterprises (SMEs). SMEs form a large part of private sector in many developed and developing countries. While cross-country research sheds doubt on a causal link between SMEs and economic development, there is substantial evidence that small firms face larger growth constraints and have less access to formal sources of external finance, potentially explaining the lack of SMEs' contribution to growth. Financial and institutional development helps alleviate SMEs' growth constraints and increase their access to external finance and thus levels the playing field between firms of different sizes. Specific financing tools such as leasing and factoring can be useful in facilitating greater access to finance even in the absence of well-developed institutions, as can systems of credit information sharing and a more competitive banking structure.

Moroccan SMEs do not use generally capital market due to rigidity of the conditions. Moroccan authorities have introduced the measurements to deal with this problem and to encourage SMEs to access in the capital market since 2000. However, these measures were less efficient because they are multiple reason, but indeed, it still attributed to the financial and institutional conditions of access to capital market. The article target is to analyze capital market reforms and its contribution to financing Moroccan SMEs. In order to help us to determine the constraints of access the SMEs to direct finance. In fact, to achieve the target we need to adopt a methodology based on the analysis of secondary statistics and official reports of the main actors of the capital markets in Morocco. Résumé Dans plusieurs études sur le financement des PME marocaines, il est constaté que cette catégorie d'entreprises ne recourent que très faiblement aux marchés de capitaux. Afin de faire face à cette problématique, les autorités marocaines ont mis en place une panoplie de mesures depuis le début des années 2000. Malgré les efforts déployés, le troisième compartiment de la bourse de Casablanca ne comporte qu'un nombre très limité de PME. Les causes sont, en effet, multiples mais, sont toujours imputées aux conditions financières et institutionnelles d'accès aux marchés de capitaux. L'objectif de cet article est d'analyser l'ampleur des réformes des marchés de capitaux et leurs apports au financement des PME marocaines. Pour atteindre cet objectif, nous adoptons une méthodologie fondée sur l'analyse des statistiques

A telephone survey aimed at examining the bed and breakfast (B&B) market of Buffalo City of South Africa was conducted, using 36 operators, selected through random sampling. The B&B's had an average of 3.6 years of existence and 2.1 part-time and 2.3 fulltime employees. They provided an amalgam of services, facilities, activities and used a variety of promotional techniques with word of mouth being the most prevalent. They experienced problems such as crime, lack of sector focus, lack of entrepreneurial creativity and skills, limited support from local authorities, lack of access to finance and competition. The success factors identified were networked enterprises, access to a dedicated fund for business finance, reduced operating expenses, non-financial support, and continuous skills development. The conceptual framework offered in this study leads to an improved understanding of the B&B sector, provides lessons and insights for other destinations world-wide and serves as a benchmark and platform for future investigations. r

This paper outlines a conceptual framework of the relationship between corporate governance and two important determinants of capital market development namely, a firm's access to finance, and its financial performance. The framework assumes that a firm's corporate governance is simultaneously determined by a group of related governance components and other firm characteristics. Whilst the capital markets play a crucial role in enhancing corporate governance standards, the effectiveness and credibility of such effort might be constrained by poor firm-level corporate governance. Moreover, the cause and effect relationship can work in the opposite direction e.g. firm-level corporate governance quality can enhance both the firm's ability to gain access to finance and its financial performance, which eventually lead to capital market development. The framework is primarily based on the economic approaches to corporate governance, although it recognises part of the assumptions of the stakeholder theory and the political economy aspects of corporate governance.

The purpose of this report is to raise attention to the constraints that presently restrict the provision of finance in Southern Sudan, and recommend actions that would stimulate the development of the sector as well as a more broad based provision of financial services.

The main providers of financial services in Southern Sudan consist of five commercial banks and six or so microfinance agencies, while a sprinkling of foreign exchange agencies provide foreign exchange and transfer services, six insurance agencies provide a range of insurance services. The commercial banks provide loans, advances and trade finance, but their lending portfolio (63 Million SDG according to the Bank of Southern Sudan’s December 2008 reports) covers only a meagre 7% of the approx. 6000 registered firms and less than 1 % of the Government of Southern Sudan’s revenue. Similarly, the microfinance agencies estimate that their microloan portfolio (9 Million according to self reported figures) only services 5% of the available clients in the greater Juba region, and less than 1% of the potential market in Southern Sudan. Further, the financial sector only provides finance in urban hubs, focuses primarily on the non-productive sectors (such as trade, construction and hotel services, etc.), and only dedicates 10 % of its loan portfolio to small firms (loans between 1000 and 100,000 USD) in Southern Sudan. The financial sector is clearly small and underdeveloped.

The main issues hampering the depth and breadth of provision by commercial banks are not the lack of liquidity, but (1) the lack of competition, and the poor capacity of local banks (in terms of credit analysis skills, controls, systems, management capacity and corporate governance), (2) the lack of collateral due to the frail structures for land registry and a nascent legal, regulatory and enforcement framework, and (3) the specific characteristics of businesses in Southern Sudan. Credit is rationed according to the high risk and the low ability to recover assets – excluding certain sectors and company types with low short-term cash flows and collateral.

Recommendations to enhance the provision of finance by commercial banks include (1) the entry of new banks in coordination with an escalated support to BOSS (for banking supervision) as well as to the local banks (in terms of capacity building), (2) the development of legal, regulatory and enforcement frameworks for lending technologies that match the client characteristics of businesses in Southern Sudan, and (3) the improvement in the financial transparency of businesses (audits, credit bureaus, business training) in coordination with the development of alternative lending technologies that are better suited to the client characteristics of businesses in Southern Sudan (guarantee/ subsidy provision, group lending structures, fixed asset lending, leasing models, factoring and asset based lending, etc). The establishment of an insurance commission might also heighten their ability to access loans from the commercial banks.

This report thus presents a set of recommendations to enhance the provision of finance of microloans by microfinance agencies, and individual loans as well as medium scale loans for trade finance (in terms of LOCs), as working capital for business expansion, and bridge finance to assist in the purchase of fixed assets (overdraw facilities). It is important to note that these recommendations would not enhance the provision of large-scale loans for agricultural finance, investment into manufacture, and real estate, and the demand for start up capital by local Sudanese firms. These would best be met by nor would be better addressed by public private partnership or through alternative support systems.

Given that some of the recommended actions will take several years to implement successfully (e.g. the availability of land as properly registered collateral), a short run strategy to address the financing needs of businesses would be ideal. Accordingly, an investigation into associated methods of reducing the lack of financial transparency of businesses in Southern Sudan (audits, credit bureaus, business training) as well as appropriate alternative lending technologies that are better suited to characteristics of businesses in Southern Sudan (lack of collateral, etc) would be timely. This report, as well as the subsequent investigation would thus pave the way for the development of innovative structures to address the specific access to finance issues in post conflict countries.

The small and medium-sized enterprises (SMEs) play an important role for economic growth in Vietnam. Access to finance is necessary in order to initiate, operate, develop and facilitate growth conditions of all businesses. Therefore, this study aims to determine factors affecting access to finance of SMEs in Vietnam. The study adopted a survey research design that employed a stratified random sampling. The primary data was collected from 400 SMEs via structured questionnaires. The Cronbach's Alpha testing methods, the exploratory factor analysis (EFA), ANOVA analysis and multivariate linear regression analysis were used in this study. The study results indicate that there are six factors significantly affecting access to finance of SMEs in Vietnam including managerial experience, the owner-manager's financial literacy, business plan, financial management regulations, the owner-manager's education and business size.

The household enterprise sector has a significant role in the Tanzanian economy. It employs a larger share of the urban labor force than wage employment, and is increasingly seen as an alternative to agriculture as a source of additional income for rural and urban households. The sector is uniquely placed within the informal sector, where it represents both conditions of

With the flagship success of M-Pesa, mobile devices have become an important tool to facilitate the financial inclusion of the previously unbanked population in developing countries. Following the success of M-Pesa in Kenya in 2007, mobile money technologies became widespread across Africa. Beginning in 2009, Ghana experienced exceptional adoption of Mobile Money technology. Many studies have examined the influence of mobile money on financial inclusion from a variety of perspectives, and many have concluded that mobile money is a game-changer in this regard. The Mobile Money concept has evolved based on introducing the other value-added services such as microloans, savings, and insurance portfolios. The researcher used a questionnaire and a face-to-face interview to obtain qualitative data for this study. Together with other research, the statistics revealed that Mobile Money transactions in Ghana had more than tripled since it became the most popular payment method. Over the last year, the platform as a service has created over 140,000 jobs and has shown to be the safest channel. It has several advantages, including lowering the cost of printing and keeping cash on hand, as well as decreasing fraud because the technology underlying it gives appropriate audit trails to prevent fraud and boost economic growth.

The intensity of recent turbulence in financial markets has surprised nearly everyone. This paper searches out the root causes of the crisis, distinguishing them from scapegoating explanations that have been used in policy circles to divert attention from the underlying breakdown of incentives. Incentive conflicts explain how securitization went wrong, why credit ratings proved so inaccurate, and why it is

The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

This paper presents recent research on access to finance by Small and Medium-Size Enterprises (SMEs). SMEs form a large part of private sector in many developed and developing countries. While cross-country research sheds doubt on a causal link between SMEs and economic development, there is substantial evidence that small firms face larger growth constraints and have less access to formal sources of external finance, potentially explaining the lack of SMEs' contribution to growth. Financial and institutional development helps alleviate SMEs' growth constraints and increase their access to external finance and thus levels the playing field between firms of different sizes. Specific financing tools such as leasing and factoring can be useful in facilitating greater access to finance even in the absence of welldeveloped institutions, as can systems of credit information sharing and a more competitive banking structure.

Firms across countries have different financing structures, determined by both firm-specific characteristics and countries' institutional environment, including their financial development. Financing structures, particularly the mix between internal and external financing, reflect in part the ease of firms' access to finance, in turn due to demand-and supply-side factors. We review methods used to date to measure individual firms' (lack of) access to finance. For large firms with good financial data, econometric analyses of financial statements based on theoretical models are useful for measuring firms' access to finance. For small and medium sized firms, surveys are the preferred approach. Existing surveys in developing countries with a 'firm-finance' component, however, are not yet of genuine use for sound research and policy-making. Future firm survey efforts need to be more detailed and focused.

This paper analyzes the relationship between banks and SMEs in the continental European bank-based system. We find that SMEs with longer bank relationships have enhanced access to loans, but at the same time they bear a higher cost for their debt. We also find that firms maintaining two bank relationships get the cheapest debt, which establishes a limit for the degree of concentration of bank relationships. Our results also show that the existence of trust between firm and bank improves access to financing and reduces the borrowing costs, whereas it increases the likelihood that guarantees will have to be provided. As a consequence, it seems that a relationship based on trust is a better strategy to improve SMEs' access to finance than the establishment of longer or more concentrated relationships.

The banking sector comprises of 49 institutions, 42 of which are commercial banks, 3 mortgage finance companies, one non-bank financial institutions and one building society as at December 2008, according to CBK annual reports. Despite the long existence of commercial banks in Kenya, local, international and multinational, they have shied away from lending to small-scale businesses. It is a well-established fact that access to finance is a major determinant of economic growth (Beck, Levine, and Loayza, 2000). Therefore, access to finance, which has been one of the core topics in development for quite some time, has emerged on the agenda of nearly all governments. The important policy question is: what measures must be taken to foster access to finance? This study therefore attempted to find out lending conditions by commercial banks that affect small-scale business in Kisii County. The study found out that competition, pricing, Commercial banks tight bank requirement as important factor that affect accessibility of loans by SMEs by commercial banks. The study concludes that Majority of the population are locked out of the formal financial sector due to the many strict requirements and stringent conditions required by the banks for one to open an account or access credit because their information is not captured. Consequently, the study recommends that CBK should influence the interest rate.

New Zealand's new Recognised Seasonal Employer (RSE) program allows workers from the Pacific Islands to come to New Zealand for up to seven months to work in the horticulture and viticulture industries. One of the explicit objectives of the program is to encourage economic development in the Pacific. In this paper we report on the results of a baseline survey taken in Vanuatu, which allows us to examine who wants to participate in the program, and who is selected amongst those interested. We find the main participants are males in their late 20s to early 40s, most of whom are married and have children. Most workers are subsistence farmers in Vanuatu and have not completed more than 10 years of schooling. Such workers would be unlikely to be accepted under existing migration channels. Nevertheless, we find RSE workers from Vanuatu to come from wealthier households, and have better English literacy and health than individuals not applying for the program. Lack of knowledge about the policy and the costs of applying appear to be the main barriers preventing poorer individuals applying.

This study examines the determinants of capital structure decisions of firms, specifically for small and private firms in developing countries. We use survey data from World Bank Enterprise survey which is not used before. We examine the differences in the determinants of capital structure decisions of private and listed firms and small and large firms. In accordance with the capital structure theory, the importance of firm level determinants of capital structure, tangibility, profitability and size are confirmed. Results are robust to the different definitions of size. Large and listed companies can have easy access to finance in developing countries, thus they have higher leverage and higher debt maturities. For small and private firms, access to finance is depended on the conditions of economic environment. Leverage and debt maturities are sensitive to macroeconomic factors.

Using a large variety of firm-level information, including survey data on ac-cess to finance of non-financial companies, we offer an insightful perspective on credit demand, focusing on Romanian SMEs segment. The information from this tool was combined with the results from the Bank Lending Survey which also captures the supply-side perspective.
We show that, according to both surveys, SMEs lending market was highly affected by the impact of the recent turmoil, a full recovery of banks’ appetite towards this segment being yet to be reached. At the same time, companies’ interest for bank loans is subdued, the cost of funding being restrictive especially in case of small firms.
A main challenge for credit institutions over the coming period is a better exploitation of firms with viable indebtedness potential, especially activating in sectors which can change the economic growth pattern (including trade loans).
For attracting SMEs interest for bank loans, flexible and tailored made prod-ucts are needed, as well as a simplification of lending process. At the same time, increasing staff training and qualifications related to project financing and firms’ counseling could be a solution for boosting lending, as well as increasing the role of guarantee and counter-guarantee funds. Reducing information asymmetries in SMEs lending system could contribute to a better functioning of SMEs loan market.

The importance of small and medium enterprises (SMEs) and their economic contribution is acknowledged globally. Although SMEs in developed economies have become fairly competitive, their counterparts in the emerging economies have struggled in the rapidly evolving external environment. The objective of this study is to present a conceptual framework for SMEs in emerging economies targeted to raise their performance. Literature indicates that the low skill level of human resource and the lack of emphasis on knowledge management are the major factors behind the struggle of SMEs to establish themselves in emerging economies. Earlier studies have discovered a positive impact of knowledge management and human capital in raising SMEs' performance. Literature also indicates that the influence of knowledge and human capital within SMEs' performance varies due to the prevailing competitive conditions. Therefore, this study proposes a conceptual framework to leverage the performance of SMEs in emerging economies and examines how this relationship may vary when it interacts with the competitive environment.

Modern energy access in Africa is critical to meeting a wide range of developmental challenges including poverty reduction and the Millennium Development Goals (MDGs). Despite having a huge amount and variety of energy resources, modern energy access in the continent is abysmal, especially Sub-Saharan Africa. Only about 31% of the Sub-Saharan African population have access to electricity while traditional biomass energy accounts for over 80% of energy consumption in many Sub-Saharan African countries. With energy use per capita among the lowest in the world, there is no doubt that Africa will need to increase its energy consumption to drive economic growth and human development. Africa also faces a severe threat from global climate change with vulnerabilities in several key areas or sectors in the continent including agriculture, water supply, energy, etc. Low carbon development provides opportunities for African countries to improve and expand access to modern energy services while also building low-emission and climate-resilient economies. However, access to finance from different sources will be critical in achieving these objectives. This paper sets out to explore the financial instruments available for low carbon energy access in Africa including the opportunities, markets and risks in low carbon energy investments in the continent.► Access to finance will be critical to achieving low carbon energy access in Africa. ► Domestic finance will be important in leveraging private finance. ► Private sector participation in modern and clean energy in Africa is still low. ► Many financing mechanisms exist for low carbon energy access in Africa. ► The right institutional frameworks are critical to achieving low carbon energy access in Africa.

Agricultural value chain financing (VCF) is an emerging phenomenon in the region but it is not well studied. Historically, small- and medium-sized famers experience problems accessing formal finance. Participation in a well-structured and dynamic supply chain seems to improve chances of obtaining financing, either directly from larger more liquid agents in the same chain or indirectly from external formal lenders

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Globally, financial service providers (FSPs) face greater competition from national and international banks and specialized financial service firms such as card services, money transfer companies, and new electronic and mobile banking firms. In response, FSPs must consider innovative business models to survive and grow their operations. This paper analyzes outsourcing theory, reviews its potential role in the financial services industry, and provides strategic and operational guidance for FSP managers.