Abstract
The issue of getting finances for the small businesses and entrepreneurs is always been in debate and remain unresolved in many countries due to unavailability of qualified venture capitalists. The developing and emerging economies set the micro finance banks for this purpose, however, it is argued that the owner and entrepreneur faces many problems like collaterals, documentation, etc. This research focuses on the role of financial banks in promoting the small business and entrepreneurial culture in the Saudi Arabia in providing credit. The research applied a mixed methodology and at the first stage, qualitative data is collected and then the results of these structured interviews were used to construct a survey questionnaire for the quantitative analysis. The result of study shows that the levels of business cooperation and information sharing and quality of business have an important significance on the success of loan application. Furthermore, the results also support that the bureaucracy of bank in terms of loan documents requirement and loan evaluation procedure can make small business hesitate when applying for loans.
Highlights
The effective and efficient supply of finance to the small business sector has been seen as one of the most important influence on its success
The evaluation procedure usually lasts longer, but the amount of loan accepted is likely much smaller than the original value applied by small business. This Research applied a mixed methodology in measuring the credit constraint of small business sector in Saudi Arabia
Together with current theories, the qualitative data collected from the structured interviews of bank credit managers in the first stage is used to construct questions in the survey questionnaire of the second stage
Summary
The effective and efficient supply of finance to the small business sector has been seen as one of the most important influence on its success. In order to analyse the problem, the selection of a valid and accurate measurement is important to ensure the quality of research findings. This is not a simple task and depends much on the possibility of information access, especially when the measurement is based on abstract and intangible constructs, such as the perceptions of bank manager and business owner’s/ entrepreneurs points of view (Lawrence et al, 2000). Applying mixed data collection methods, the study focuses on the problem of bank finance access faced by small businesses/ entrepreneurs, which is one of the most important factors in determining the success of business. The findings of the structured interviews are used to construct and validate the questionnaire survey of small business owners in the second phase of data collection
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