Bank’s Effectiveness as a Credit Provider for SMEs During Economic or Financial Downturns

Abstract

The purpose of this research is to contribute forward to resolving a thoughtful tension for many developing economies on small and medium-sized enterprises (SMEs) and entrepreneur businesses’ credit accessibility and discontinuity during economic or financial downturns. This work is motivated by the global financial crisis (GFC) in 2008 and the COVID-19 pandemic which have created a shortage of financial credits and have tested the ability of banks to respond to crises. Our work is focused on Gulf Cooperation Council countries (GCC). Through our integrative literature review, we found that some factors more influential on credit providing to this segment than others mainly; the lack of reliable financial information, length of relationship with the main bank, and credit rationing with significant interaction and impact among them, our research will focus on those factors. This research considers the regulators’ intervention with the dilemma and possible trade-offs between the objective of maintaining a robust financial system through intensified regulations and the real impact on the economic growth which becomes more critical during challenging times.