Assessment of Small and Medium Enterprises Insolvency to Banks in Qatar

Abstract

This research aimed to examine and identify different factors influencing Small and Medium Size Enterprises (SMEs’) failure to meet financial obligations to banks in Qatar. Based on the obtained results, the development of recommendations for regulators. As the contributions of SMEs are significant in the maintenance of economic development in the country. Nevertheless, SMEs have been struggling to finance the projects as they often lack the required funds and thus have to source from financial institutions. The authors selected Qatar Development Bank as the case study. A systematic literature review was made and a questionnaire with closed-ended questions was designed to explore the Small and Medium Size Enterprises’ causes of non-payments of loans. Authors have approached SMEs with loan default by phone, as this was the only possible way to collect data due to the social distancing during the Covid-19 pandemic. A complete list of 142 Small and Medium Size Enterprises with nonpayments of loans was taken from the Qatar Development Bank and approached for data collection, and received 85 responses. Simple descriptive statistics for the analysis were used. The findings showed that SMEs encounter challenges in the repayment of loans. Moreover, the highly competitive market affects negatively the implementation of obligations and insolvency of SMEs. The findings have a number of implications for the policy measures and mechanisms aimed at solving problems of insolvency of SMEs and their further development in the country.