The pillars determining financial inclusion among SMEs in Egypt: service awareness, access and usage metrics and macroeconomic policies

Mohamed Samy Eldeeb,Esmat Mostafa Kamel,Yasser Tawfik Halim

doi:10.1186/s43093-021-00073-w

Mohamed Samy Eldeeb, Esmat Mostafa Kamel + Show 1 more

Open Access

https://doi.org/10.1186/s43093-021-00073-w

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Abstract

Over the past decade, financial inclusion has been a trending topic and key priority in developing countries seeking to build a resilient financial sector and pursuing economic growth. Most of the recently launched financial inclusion initiatives in Egypt, especially those aligned with the 2030 sustainability strategy, have targeted marginalized and excluded individuals. Only a few have addressed the financial inclusion of small- and medium-sized enterprises (SMEs). Accordingly, this paper aims to identify the main pillars of financial inclusion for SMEs. In keeping up with the mainstream literature, it introduces a number of financial inclusion determinants designed to attract SMEs. They include supply-side determinants such as access to financial services and marketing awareness campaigns, which act as tools to segment financial services and market their benefits to SMEs, and demand-side determinants, which involve the use of financial services. Finally, there is an assessment of the macroeconomic risks to investors and SMEs. The researchers’ methodology was based on first deriving a novel dataset from responses to a questionnaire addressing bankers who manage SME portfolios, second analyzing the dataset through descriptive and inferential statistics and third undertaking a twofold econometric estimation. The econometric estimations started with principal component analysis (PCA) and proceeded to a logistic regression to determine the significant variables pertinent to increasing the financial inclusion of SMEs. The PCA suggested three main pillars determining financial inclusion. They are integrated marketing tools, which increase SMEs’ awareness of and access to the most sophisticated banking services, usage of banking services, and assessment of the macroeconomic risks that would prevent SMEs from gaining access to financial services. As well, the interaction term between the variables derived from the three pillars accounts for a variability of 86.6% in the level of financial inclusion of Egypt’s SMEs.

Highlights

Financial inclusion has achieved great notoriety among recently introduced concepts, especially after the onset of the 2008 global financial crisis
Account transaction costs for small- and medium-sized enterprises (SMEs) [C2] 6.Sales promotion SMEs [B1] 7
The researchers have provided a new perspective on the financial inclusion of SMEs and the expansion of the financial services provided to them in Egypt

Summary

Introduction

Financial inclusion has achieved great notoriety among recently introduced concepts, especially after the onset of the 2008 global financial crisis. That crisis compelled international financial institutions to devise innovative strategies to achieve financial stability and provide access to the highest number of banking services possible. Once financial inclusion and stability are achieved, economic growth will be stimulated, and size of the underground economy will diminish. Especially developing ones, have derived universal policies from the World Bank Global Findex to achieve financial inclusion. Such policies have sought to introduce as many. The policies have had a great impact on the economic and social conditions of individuals and SMEs alike on a national level [12, 25, 54]

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