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Bank Financing for SMEs – Lessons from the Literature

Published online by Cambridge University Press:  26 March 2020

Thorsten Beck
Thorsten Beck*
Affiliation:
Tilburg University and CEPR
*
E-mail: T.Beck@uvt.nl.
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Abstract

This paper surveys the recent literature on the relationship between SMEs, financial deepening and economic development. While a large SME sector is not associated with faster economic growth or poverty alleviation, financial deepening can have a pro-growth and pro-poor impact by alleviating SMEs’ financing constraints, enabling firm entry and entrepreneurship, and better resource allocation. It is important to differentiate between different segments of the SME population, most critically between subsistence micro entrepreneurs and transformational entrepreneurs. This paper also discusses the importance of market structure, competition and regulations for SMEs and their access to finance over the business cycle and during crises.

Keywords

SME lendingfinancial deepeningcompetitioncrisisG2G3L11L25
Type
Research Articles
Information
National Institute Economic Review , Volume 225 , August 2013 , pp. R23 - R38
Copyright
Copyright © 2013 National Institute of Economic and Social Research

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Footnotes

Parts of this paper are from a previous working paper, ‘SME finance – lessons from the recent literature’, written for the Independent Evaluation Group of the World Bank. Comments by Miriam Bruhn, Andrew Stone, two anonymous referees, the editor and seminar participants at the World Bank are gratefully acknowledged.

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