SME Financing Research Articles

A Path Study of ESG Standards for SME Financing Constraint Mitigation

A Path Study of ESG Standards for SME Financing Constraint Mitigation

How does society satisfaction affect the capital structure of firms? A two-part fractional regression approach

<abstract> <p>This paper examined the influence of society satisfaction on the capital structure decisions of small and medium–sized enterprises (SMEs). Applying data from an online questionnaire, we captured the well-being and perceptions that individuals hold about their own quality of life through a latent variable measuring satisfaction with life. In addition, the study used a sample of SMEs from Portugal for the pandemic year of 2020. Using fractional regression models, our findings revealed a statistically significant relationship between society satisfaction and SMEs' leverage. Specifically, we showed that higher levels of satisfaction decrease debt levels among SMEs. However, further investigation, employing a two-part fractional regression model, showed that the overall negative effect is, in fact, only explained by the increasing propensity for firms to remain debt-free in the presence of greater levels of society satisfaction. Consequently, while society satisfaction appears to influence the decision to engage in debt financing, this does not significantly impact the amount of debt taken on by SMEs. In summary, this paper highlights the importance of society satisfaction to SME capital structure decision-making and contributes to a deeper understanding of the mechanisms driving SME financing decisions amidst socio-economic dynamics.</p> </abstract>

Inclusive Finance for SMEs in Pakistan: A Supply-Side Perspective

Objective: Inclusive finance aims to escalate the access and usage of financial services among SMEs and individuals as well. Therefore, it is mainly concerned with efforts towards financial inclusion, which means easy access and usage of a wide range of affordable financial products and services by everyone, provided by a variety of sound, responsible, and sustainable financial institutes. In Pakistan, SMEs face severe issues towards access to formal finance and bound to meet their financial needs by using informal finance. This study aims to highlight the supply-side factors impacting SME's access to finance in Pakistan. Methodology: This quantitative research has been conducted in the five big cities of Punjab province. By using a stratified sampling technique SMEs from three main sectors have been included in this study manufacturing, services and trading. Findings: In line with prior research study concluded that for inclusive growth and development, provision of resources, favourable policies and regulatory reforms, financial and other national institutions, international bodies support can bring significant change in the status of SMEs in Pakistan. Implications: Current study will be helpful for policy makers and financial institutions to formalize their structure and strategies to facilitate SMEs in Pakistan.

Importance Understanding Literacy Finance in Building Sustainable MSMEs

Objective study This is for increase understanding literacy finance among SMEs to become attention important for development sustainable. Method study This with systematic literature review of four article relevant and appropriate formula problem. Results found exists eight antecedents and four mercy consequently from literacy finance for SMEs. Limitations article This is Still focused on one database only and general discussing MSMEs, so researcher recommend for researcher next in perfect article.Keywords: Literacy Finance, MSMEs and Finance

Financing Moroccan SMES: Analysis of the influencing factors and the crucial role of the government guarantee scheme

This study uses a quantitative approach to examine the determinants of SME financing in Morocco. The sample consists of 500 Moroccan SMEs that have submitted applications for bank finance, with their applications being assessed for a possible government credit guarantee. The sample includes companies that obtained state-guaranteed bank financing, those whose applications were rejected but that obtained other financing, and those that did not obtain financing, all evaluated in the year following the application. The analysis is based on nominal logistic regression to examine the interactions between different variables, including the amount of credit requested, profitability, debt level, repayment capacity, size, managerial shareholding, decision-making maturity, and the presence of a government credit guarantee. Following careful collection and analysis of the data, a number of results were drawn. In particular, it emerged that high profitability, solid repayment capacity, a minimum size requirement, an appropriate level of debt, high decision-making maturity and the presence of a government credit guarantee are significant factors that increase the likelihood of obtaining financing. On the other hand, the amount of credit requested and the manager’s shareholding did not show any significant impact on the probability of obtaining financing.

The Sustainability of Sharia MSMEs in the Halal Industry of Indonesia: Funding, Protection, and Sharia Principles

This study aimed to analyse the relationship between Islamic SME financing, sharia insurance protection, and the sustainability of Islamic SMEs in the East Java region, Indonesia, taking into account Sharia principles such as maisir, gharar, and riba. Within this framework, the importance of sharia-compliant financing for SMEs and asset protection as well as operations in accordance with sharia principles were emphasised as determinants of the sustainability of Islamic SMEs. This study employed a quantitative approach, sampling 244 respondents who were owners of Islamic SMEs in East Java, Indonesia. Data were collected through the Likert-scale questionnaire to measure respondents' perceptions of Islamic SME financing, sharia insurance protection, and the sustainability of Islamic SMEs. The results of data analysis were expected to reveal the relationship between financing, insurance protection, and the sustainability of Islamic SMEs, as well was identify the factors influencing this relationship. These included a better understanding of asset protection and operational aspects of Islamic SMEs and the importance of financing in line with sharia principles. This research integrated elements of financing, insurance protection, and the sustainability of Islamic SMEs within a strict sharia framework, which has not been previously widely explored. Therefore, this research contributes to knowledge in the field of Islamic economics and the development of Islamic SMEs.

Access to Digital Finance of SMEs in the Central Region of Ghana

This study assessed the level of knowledge and use of digital platforms by SMEs in Cape Coast, Mankessim, Assin Fosu, Agona Swedru and Kasoa. Using a quantitative research approach data was gathered from 400 SMEs in Cape Coast, Mankessim, Assin Fosu, Agona Swedru and Kasoa. Self-administered questionnaires were shared and a purposive sampling technique was employed. Using SPSS to test descriptive statistics, results from objectives indicated that managers of SMEs in the study areas have more knowledge and utilize Mobile Money more than any of the country's digital platforms. It is recommended that digital trading platform providers should enhance their advertising and focus on making their platforms easy to use for the average consumer.

China's SME Financing and Shadow Bankings Positive Impact on it

The paper deals with the impacts of shadow banks on small and medium enterprise financing. The overview of the field and the current situation of SMEs are discussed, as well as how vital SMEs are in China. The financing venues and predicaments for SMEs are concerned; we further show how SMEs benefit from the shadow bank. The paper describes the relationship between SMEs and shadow banks and expounds on the shadow bank from the borrower, lender, and investor perspective. Finally, we analyze the financing environment of SMEs and find that the climate is improving though banks are pessimistic.

Research on Internet Finance and SME Financing Model and Risk

The Internet finance industry is expanding quickly, and at the same time, it is closely linked to the growth of small and medium-sized businesses. This study discusses the history of Internet finance, the present state of the sector, its financing model, its role in financing small and medium-sized businesses, and further analysis of the risks associated with its financing model. At the same time, this paper also puts forward management suggestions for small and medium-sized enterprises, as well as ways and means to improve risk management. This paper analyzes the previous literature and data, and it can be concluded that Internet finance is a new form of financial business that makes full use of Internet technology to carry out profound changes in financial business. It refers to the emerging financial model that realizes financing, payment, and information intermediaries by means of Internet technology and mobile communication technology, which is different from the indirect financing of commercial banks and the direct financing of the capital market.

Social-economic factors affecting small business performance among chisokone marketers in Kitwe district of Copperbelt Province, Zambia

Globally, marketers are increasingly recognized as important drivers of economic growth and are widely accepted as key aspect of economic dynamism. Small businesses are a driving force not only for economic growth, but also poverty reduction through job creation. Industrialization and economic growth come from small businesses that grow to big industries. Therefore, the study aimed at assessing socio-economic factors affecting small business performance among Chisokone marketers in Kitwe district of Copperbelt province, Zambia. The study employed both the qualitative and quantitative methods and a descriptive survey design that sampled council members for Kitwe district and Chisokone market marketers. Data was obtained from the respondents by means of interviews and questionnaires. Frequency tables, graphs, figures and pie-charts were used to analyze the qualitative and quantitative data. Data was also analyzed by the use of softwares; Statistical Package for Social Sciences (version 26) and Microsoft Excel (version 16). The results showed that most respondents had a strong feeling that there were factors affecting business growth in a negative way such as SMEs financing. The findings also revealed that majority of SMEs (53%) were not legally registered. Many businesses fall under sole proprietorship and the main source of finance or capital is from the family and friends. 77% of SMEs stated lack of collateral which hampers business operations resulting in unwillingness for banks to finance them; 63% lacked business management experience and 85% lacked technological advancement to enhance the overall performance. Despite marketers’ willingness to do business, crucial social economic factors such as access to finance, market demand and infrastructure are lacking. The study therefore recommended that sustainable policy interventions or technical support should be provided by government or non-governmental organizations to ensure small scale sustainable business growth.

Retracted: Credit Risk Assessment of e-Commerce Supply Chain Finance of SMEs Based on Dynamic Reward and Punishment Perspective

Retracted: Credit Risk Assessment of e-Commerce Supply Chain Finance of SMEs Based on Dynamic Reward and Punishment Perspective

Digital transformation and financing constraints of SMEs: evidence from China

ABSTRACT It is known that digital transformation can sharpen the competitive edge of SMEs, yet the relationship between digital transformation and the financing of SMEs only receives little attention. Based on the data of Chinese companies listed on SME board from 2010 to 2020, this paper empirically examines the impact of digital transformation on the financing constraints of SMEs as well as its mechanism. The study finds that digital transformation significantly eases the financing constraints of SMEs, and the conclusion remains valid after considering endogeneity issues and conducting robustness tests. The mechanism analysis manifests that SMEs improve the quality of external information disclosure through digital transformation, thereby alleviating financing constraints. In addition, the impact of digital transformation on the financing constraints of SMEs demonstrates prominent heterogeneity. The mitigation effect of digital transformation is more pronounced in areas where digital financial is well developed, in state-owned enterprises, high-tech enterprises and long-term oriented enterprises. In the context of SMEs, this paper reveals the relationship between digital transformation and corporate financing, enriching the studies on the organizational performance effects of digital transformation.

Investment and financing for SMEs with bank-tax-guarantee

Considering an enterprise funding the expansion investment with the financial innovation instrument, bank-tax-guarantee (BTG), we find that BTG significantly increases the firm value and produces a lower guarantee cost, and guarantee is the main driving power in BTG.

Does Risk Attitude Increase the Effect of Financial Literacy on Access to Finance?

The paper aimed to examine the moderating impact risk attitude has on the link between financial literacy and access to funding for SMEs. Respondents included SMEs in Accra via standardized questionnaires. 396 accurate responses were analyzed utilizing PLS-SEM. Findings showed an important beneficial correlation between knowledge of finances and credit accessibility. The relationship between risk-taking behavior and financial access also proved significant. Additionally, the study discovered that the connection between financial competence and financial access is significantly moderated by risk-taking tendency. The results support the knowledge base view theory, according to which financial literacy is a unique strategic asset that firms can exploit to gain an advantage over rivals. Additionally, it was established that risk-averse owners/managers are more likely to miss out on possibilities to build wealth, which opens up access to credit or even poses the willpower to access debt finance

Financial development, legal systems and SME finance: Cross-country evidence

This paper provides a comprehensive investigation into the selection of different sources of finance for both short-term and long-term projects by SMEs, utilizing cross-country data from the World Bank. The results highlight the crucial roles played by financial development and legal system in the countries where SMEs operate. Specifically, with better developed financial systems, SMEs are more likely to use formal sources of external finance from formal sources (e.g., bank and non-bank institutions) to meet their short term and long term financing needs, highlighting the importance of financial development in accessing external finance for SMEs. Furthermore, this paper provides evidence on the moderating effects of legal systems on the favourable impacts of financial development on SME finance. In particular, the effects of financial development on SMEs’ access to external finance are more pronounced in countries with stronger investor protection, such as common law countries, than in those civil law countries, highlighting the importance of legal syystems in facilitating SME financing and suggests that policymarkers should consider strengthening investor protection on promote SME growth and development.

Transition Of Access To Finance For Women-Owned SMEs: Pre And Post COVID-19 Micro-Study For Bulawayo Metropolitan

Purpose: This study seeks to delineate the transition of access to finance for women-owned SMEs (pre and post COVID-19) in Bulawayo Metropolitan as a way of understanding the adequacy of financing and recovery potential of SMEs post the pandemic. Methodology: The study adopts survey methods (questionnaires and interviews) on a conveniently selected but diverse (different economic sectors, formal and informal, different sizes and business forms) sample of women-owned SMEs in Bulawayo Metropolitan. Findings: The study confirmed the widening financing gap for women-owned SMEs on account of SMEs’ reduced bankability and reduction in tenability of most financing sources post COVID-19. The emergence of new costs (rental and debt arrears, revival of operations, re-hiring of labor, acquiring of technology, financing working capital and retooling increase) increased SMEs’ financing needs post COVID-19. Targeted financial intervention is imperative for a speedy recovery of women-owned SMEs post the pandemic Originality Value: This study provides an uncommon transitory dimension of literature on access to finance for women-owned SMEs (prior and post COVID-19). Secondly, tracing the transition of access to finance for women-owned SMEs advances intervention strategies for timeous recovery of the SMEs. Thirdly, to the best of our understanding, this paper is the first to adopt a gendered approach to the transitory status of access to finance.

Reintroducing Industry Effects in Capital Structure Determination of SMEs

Abstract Following recent literature on the specific field of industry effects on capital structure determination (Kumar et al., 2017; Daskalakis et al., 2022), the main purpose of this paper is to reintroduce the importance of industry effects in the determination of financial leverage, focusing on SMEs. In this paper, we investigate whether SMEs capital structure is determined differently across different industries. We construct a three-stage econometric model, built around industry differentiations in capital structure determination, aiming to investigate the following two aspects: a) the relationship between the debt ratio and specific capital structure determinants, taking the industry factor under consideration, b) any potential differentiation in capital structure determinants across the selected industries. We not only show that the different capital structure determinants affect financial leverage in different ways across industries (different signs), but we also show that the level of intensity is different (statistically different coefficients) even in case the signs are the same. JEL classification numbers: G3, G32. Keywords: Capital Structure, Financial Leverage, Industry Effects, SMEs Financing, Pecking Order Theory, Trade-off Theory.

A Study on the Impact of Digital Inclusive Finance on Business Innovation- Financing Constraints as a Mediating Variable

SMEs, or Small and Medium-sized Enterprises, are crucial to China's economic growth. However, their small size and limited credit rating often result in significant financing constraints, which hinder their ability to innovate. Fortunately, the advent of digital inclusive finance has opened up new financing channels and methods for SMEs. This paper analyzes data from 2013-2020 for Chinese A-share SMEs listed on the board, and matches it with Peking University's digital inclusive finance municipal data. Through empirical testing, the study confirms that digital inclusive finance can help alleviate SME financing constraints, leading to increased innovation. The research aims to explore how digital inclusive finance can provide better solutions for SME financing, promoting the innovative development of SMEs.

Research on Digital Inclusive Finance to Alleviate the Dilemmas of SME Financing and Countermeasures

SMEs are the focus of regional economic development, which mainly solves a large number of labor problems and provides technological innovation. However, SMEs have great difficulties in corporate financing . The emergence of inclusive finance is a breakthrough in supporting disadvantaged groups to enjoy low-cost and high-quality financial services, among which the technical support of digital inclusive finance is of great significance in solving the problem of financing channels for SMEs. In this paper, we will start with the current situation of SME financing development and the reasons for financing difficulties, identify the current problems and put forward corresponding suggestions to the current problems by analyzing the impact of digital inclusive finance on SME financing constraints.

Growing the African Economy Through SMEs: A Consideration for Crowdfunding

Globally, the role of by SMEs in economic development and growth through the provision of employment, poverty alleviation and contribution to Gross Domestic Product (GDP) has been widely acknowledged. Various governments have provided policy support to ensure that this role is sustained. Despite this support, SMEs are still faced with inability to access capital from the conventional banks. Crowdfunding emerged as an alternative source of funding for SMEs. This study is about how SMEs can contribute to the growth of African economy using Crowdfunding as alternative source of funding. The study employed exploratory design method focusing on comprehensive and comparative review of existing articles, journals, periodicals and other relevant literatures to gain insight into factors militating against access of funds by SMEs and the role of crowdfunding as alternative fund sourcing method available to SMEs. The study recommended that government should as a matter of urgency developed rules, regulations and framework that will guide the modus-operandi of crowdfunding. The study also recommended that SMEs should learn from developed economies like that of USA and France where crowdfunding had been successfully used as alternative funding source for greenhorn projects.