Abstract
The Stock Exchanges of Bangladesh have initiated a new window for small and medium enterprises so that they can get finance by issuing securities. Though 80% of the business in Bangladesh are SMEs, which are responsible for 25% of nation’s GDP and 35.49% of the total workforce, limited access to formal financing impedes their effective operations and long-term growth. As a new platform, the insights related to obstacles of listing and fundraising, regulatory issues, and the future potentials remain uncovered due to lack of research initiatives. This study addresses these insights by analyzing both primary and secondary data. The study findings outline that SMEs now have the opportunity to trade-off between loans from creditors and financing by issuing securities. The decision mostly depends on whether a firm has enough collateral to avail loan from creditors, or it is prepared enough with proper documentation, standard books of accounts and regulatory issues of the capital market. While estimated fundraising costs through the capital market stand at 0.6% to 1.03%, banks and financial institutions charge 13% to 17% for interest along with 1% to 2% for processing fees and stamp duty. However, the capital market demands limited liability company, asset valuation, standard books of accounts, tax filing, reporting and disclosure issues. The regulators have developed the platform as a learning ground by following ‘Go Easy’ principles so that the SMEs can exercise reporting and governance issues, and contribute to institute a transparent and sustainable capital market in the future. Keywords: SME, financing, capital market, small capital platform, stock exchange DOI: 10.7176/JESD/12-2-03 Publication date: January 31 st 2021
Highlights
Small and Medium Enterprises (SMEs) are considered as blood of an economy. 80% of the business organization of Bangladesh are SMEs that comprise 35.49% of the total workforce (Star Business Report 2019)
The investors or group of investors have appeared in demonstration, human chain and other modes of protests for several times including 14th January 2020, 25th April 2019, and 20th May 2018 against the bourses, Bangladesh Securities and Exchange Commission (BSEC), government or alike stakeholders
This study addresses the research gap by articulating listing and fundraising obstacles of SMEs and their possibilities in the Small Capital Platform (SCP) of Bangladesh
Summary
Small and Medium Enterprises (SMEs) are considered as blood of an economy. 80% of the business organization of Bangladesh are SMEs that comprise 35.49% of the total workforce (Star Business Report 2019). The scope of the SME sector is yet to explore considering its contribution to neighbouring economies. The investors or group of investors have appeared in demonstration, human chain and other modes of protests for several times including 14th January 2020, 25th April 2019, and 20th May 2018 against the bourses, Bangladesh Securities and Exchange Commission (BSEC), government or alike stakeholders. These demonstrations express lack of confidence among the investors
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
