The Effect of Firm’s Attributes on Credit Accessibility: An Empirical Analysis of SMEs in Bangladesh

Abstract

SMEs play a crucial role in social and economical development, employment generation, poverty alleviation, export participation, innovations, and women empowerment. The contribution of this sector is lower in comparison to other Asian countries (Moulick 2021). This sector contributes around 23 percent in the 2017-18 fiscal year. But the growth and development are most vulnerable for their hard access to bank credit due to shortage of information asymmetry and collateral. This study examines the effect of firms’ attributes on access to bank loans. The methodological approach of this study is deductive. The study uses primary data collected from the semi-structured questionnaires with a view to present meaningful commentary on financial leverage in Bangladesh. The semi-structured questionnaire was administered to 400 SME firms to collect data on credit accessibility. Among the firms, only 174 firms have taken loans from banks. Multiple regression has been used to identify the effects of firms’ attributes on debt accessibility. In the equation, financial leverage is the dependent variable, and firms’ attributes are the independent variable. The result of the study reveals that internal capital, collateral, financial statements of the firm, tax payment, location, age of the firm, ownership style, and sector of the firm have an influence on access to a bank loans.