Informal Firms and Financial Inclusion: Status and Determinants

The study examines the determinant factors that influence financial inclusion among small and medium enterprises (SMEs) in Ethiopia. The study uses an explanatory research design and a mixed research approach with both primary and secondary sources of data. More specifically, the study adopts a multiple linear regression model. The finding of the study reveals that; supply-side factors, demand-side factors, market opportunity, and collateral requirements have a positive effect on the firm’s access to finance. On the other hand, institutional framework factors, and the costs of borrowing negatively affect the firm’s access to finance. This study suggests concerned bodies sustain rapid and inclusive economic growth and hence eradicate extreme poverty and hunger, the policymakers must build an efficient, strong, and well-functioning financial market system that provides affordable and sustainable financial service to SMEs.

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The Causal Effect of Access to Finance on Productivity of Small and Medium Enterprises in Vietnam

Sustainability ◽

10.3390/su11195451 ◽

2019 ◽

Vol 11 (19) ◽

pp. 5451 ◽

Cited By ~ 4

Author(s):

Mai Huong Giang ◽

Bui Huy Trung ◽

Yuichiro Yoshida ◽

Tran Dang Xuan ◽

Mai Thanh Que

Keyword(s):

Financial Services ◽

Small And Medium Enterprises ◽

Manufacturing Sector ◽

Causal Effect ◽

Bank Loan ◽

Firm Productivity ◽

Function Estimation ◽

Access To Finance ◽

The Government ◽

Medium Enterprises

In many developing countries, obtaining financial services at affordable rates and fair terms has been a significant challenge for small and medium enterprises (SMEs). However, this issue has not been paid much attention in Vietnam, even though SMEs account for about 95% of total enterprises and the financial market of the country has not been well developed. This study investigates the causal effects of access to finance on productivity of SMEs operating in the manufacturing sector in Vietnam. Productivity was measured as the total factor productivity (TFP) obtained by production function estimation using the Levinsohn and Petrin approach. Regarding financial accessibility, two factors covered the extent to which firms might have a bank loan or overdraft facility were employed. To study the causal inferences of access to finance on firm productivity, the research adopted the difference-in-differences (DID) approach, as well as the propensity score matching (PSM) coupled with DID technique. The empirical results indicated that improving the financial accessibility could directly enhance firm productivity. Particularly, it was shown that firms having access to a bank loan could significantly improve TFP by approximately 8.6% in the DID model and about 9% in the PSM-DID model. Meanwhile, the firm average TFP increased by approximately 12.3% and 15.7% in simple DID and PSM-DID models, respectively, when firms had an overdraft facility. These findings suggest that the government should put more effort into assisting SMEs in generating bankable projects, and create a sound and healthy financial environment to stimulate firms’ access to finance, which will ensure their sustainability and growth.

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Financial Inclusion, P2P Lending, and MSMEs

10.4018/978-1-7998-8447-7.ch005 ◽

2022 ◽

pp. 60-81

Author(s):

Tulus Tambunan

Keyword(s):

Economic Development ◽

Financial Crisis ◽

Financial Services ◽

Small And Medium Enterprises ◽

Asian Financial Crisis ◽

Aggregate Data ◽

Financial Inclusion ◽

Alternative Source ◽

P2p Lending ◽

Medium Enterprises

In Indonesia after the Asian financial crisis of 1997–1998, wide reforms were carried out, and “inclusive” economic development were adopted. One component of inclusive economic development is “financial inclusion.” This implies an absence of barriers that might deter micro, small, and medium enterprises (MSMEs) from obtaining financial services. However, the portion of bank credit received by MSMEs is still small. Therefore, financial technology (FinTech) is welcome as an alternative source of funding for MSMEs. This chapter discusses three related issues, namely financial inclusion, MSMEs, and P2P lending. It concludes that Indonesia still has a long way to go to achieve full financial inclusion. This chapter suggests that with the presence of P2P lending, the number of MSMEs, especially MSEs, in Indonesia that have access to formal financing will increase. Even though aggregate data are not available, the interviews with a small number of owners of MSEs who received P2P loans suggest that the presence of P2P lending companies give some benefits for MSEs.

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DETERMINANTS OF FINANCIAL INCLUSION AND PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN NAIROBI CITY COUNTY

International Journal of Finance and Accounting ◽

10.47604/ijfa.203 ◽

2016 ◽

Vol 1 (3) ◽

pp. 62

Author(s):

Elvince Hillary Otiato

Keyword(s):

Financial Institutions ◽

Financial Services ◽

Social Inclusion ◽

Small And Medium Enterprises ◽

Financial Inclusion ◽

Money Transfers ◽

Resource Levels ◽

Access And Quality ◽

And Performance ◽

Medium Enterprises

Purpose: The general objective of this study was to assess the determinants of financial inclusion and performance of small and medium enterprises in Nairobi City County. Methodology: The study adopted a descriptive research design. Findings: Determinants of financial inclusion among the SMEs in Nairobi City County included; access, Quality and usage of various financial services. The study revealed that determinants of performance among the SMEs in Nairobi City County included; product/service costs, volume levels traded, profit margins, human resource levels and efficiency levels. The results also identified technological innovations such as MPESA, Mshwari and Agency banking as the most crucial technology factors which played a crucial part in improving their business. The regression results revealed that there was a direct link between the performance levels of SMEs and financial inclusion. Further, the study findings also revealed that technology included platforms like mobile money transfers, ATMs and agency banking eased and ensured inclusion. This was seen as an integral part of inclusion further enhancing the performance of various SMEs.Unique contribution to theory, practice and policy: This study can be a source of solution to be implemented by government of Kenya and the Central Bank of Kenya to create policies that create room for small and medium enterprises to obtain loans from financial institutions. In addition, the study This study will also create awareness among financial institutions in the importance of usage, access and quality of finances to small and medium enterprises which in turn will enable better performance of enterprises. This will definitely have an effect on social inclusion of citizens and better the economic performance.The aftereffects of the study would also contribute towards filling the gap on the topic. It is trusted that the discoveries of the study will make significant augmentations to the writing in the field of financial inclusion and performance fortifying further interest.

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Implementation of Inclusive Finance in Empowering Micro, Small and Medium Enterprises (UMKM) at Micro Waqf Banks

EKONOMIKA SYARIAH Journal of Economic Studies ◽

10.30983/es.v5i1.4294 ◽

2021 ◽

Vol 5 (1) ◽

pp. 82

Author(s):

Rahma Jaziyatul Chikmiyah

Keyword(s):

Financial Literacy ◽

Financial Services ◽

Qualitative Method ◽

Small And Medium Enterprises ◽

Financial Inclusion ◽

National Strategy ◽

Classic Problem ◽

The Government ◽

Medium Enterprises ◽

The Impact

This study aimed to analyze the impact of the implementation of financial inclusion at Al-Fithrah Micro Waqf Bank regarding the empowerment of Empowering Micro, Small and Medium Enterprises (MSME). Even though MSME sectors have become a central foundation for the economy, the capital limitation is still considered a classic problem. It influences the government to release National Strategy Financial Inclusion to provide financial services that all levels of society can access. The indicators inclusive financial consists of access, usage and quality to realize empowerment through financing and assistance. This research used a descriptive qualitative method, and data were collected through interviews, observations, and documentation. The results showed that the financial inclusion component had been implemented but still has many potentials to be maximized. The components of access and usage have been appropriately implemented in terms of physical aspects and prices that are easily accessible to customers. These two components have an impact on increasing customer Islamic financial literacy. In the quality component, product variations are expected to fulfill the different business needs of customers. Meanwhile, financing has not significantly impacted fulfilling the welfare component’s capital needs because the nominal value is too small. Furthermore, business assistance has a more significant impact on improving the business and spiritual aspects of clients. Penelitian ini bertujuan untuk menganalisis dampak penerapan keuangan inklusif pada Bank Wakaf Mikro Al-Fithrah terhadap pemberdayaan UMKM di sekitarnya. Meskipun sektor UMKM telah menjadi fondasi yang cukup sentral bagi perekonomian, keterbatasan permodalan masih menjadi masalah klasik UMKM. Hal ini mendorong pemerintah untuk mengeluarkan Strategi Nasional Keuangan Inklusif yang bertujuan untuk memberikan layanan keuangan yang dapat diakses seluruh lapisan masyarakat. Indikator keuangan inklusif yang terdiri dari akses, penggunaan dan kualitas diterapkan untuk mewujudkan pemberdayaan UMKM melalui pembiayaan dan pendampingan. Penelitian ini menggunakan metode deskriptif kualitatif melalui pengumpulan data wawancara, observasi, dan dokumentasi. Hasil penelitian menunjukkan bahwa komponen keuangan inklusif telah diimplementasikan namun masih berpotensi untuk dimaksimalkan. Komponen akses dan penggunaan sudah terlaksana dengan baik dilihat dari segi fisik dan harga yang mudah dijangkau nasabah. Kedua komponen tersebut berdampak pada peningkatan literasi keuangan syariah nasabah. Pada komponen kualitas, variasi produk diharapkan dapat memenuhi kebutuhan modal nasabah yang berbeda. Sedangkan untuk komponen kesejahteraan, pembiayaan belum memberikan pengaruh signifikan untuk memenuhi kebutuhan permodalan karena nilai nominal yang terlalu kecil. Selain itu, program pendampingan usaha (HALMI) memiliki dampak yang lebih signifikan terhadap peningkatan usaha dan spiritual pelanggan.

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Digital Financial Inclusion and Sustainable Growth of Small and Micro Enterprises—Evidence Based on China’s New Third Board Market Listed Companies

Sustainability ◽

10.3390/su12093733 ◽

2020 ◽

Vol 12 (9) ◽

pp. 3733 ◽

Cited By ~ 1

Author(s):

Liu Yang ◽

Youtang Zhang

Keyword(s):

Financial Services ◽

Small And Medium Enterprises ◽

Listed Companies ◽

Sustainable Growth ◽

Financial Inclusion ◽

High Tech ◽

Financial Industry ◽

Medium Enterprises ◽

The Impact ◽

Micro Enterprises

The United Nations’ 2030 Agenda for Sustainable Development aims to promote inclusive and sustainable economic growth and encourage the formalization and growth of micro, small, and medium enterprises through access to financial services. This study examines the impact and mechanism of the digital financial inclusion on the sustainable growth of small and micro enterprises in China. For this purpose, it uses the data from China’s New Third Board Market listed companies from 2011 to 2018 and the digital financial inclusion index of Peking University. The results show that the development of digital financial inclusion helps promote the sustainable growth of small and micro businesses, particularly in private, high-tech industries, and competitive markets. The impact mechanism of this development prevents any financial crisis caused by the capital structure imbalance and capital liquidity problems of small and micro enterprises by alleviating the financing constraints, thus promoting their sustainable growth. The research results show that, under the background of high-quality development of China’s economy, continuous promotion of digital financial inclusion and reshaping of the ecological pattern of the financial industry can provide steady financial support for the sustainable growth of small and micro enterprises, and realize the healthy development of micro enterprises and macro economy.

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Unlocking Access to Finance for SMEs

IMF Working Papers ◽

10.5089/9781513536156.001 ◽

2020 ◽

Vol 20 (55) ◽

Cited By ~ 1

Author(s):

Armand Fouejieu ◽

Anta Ndoye ◽

Tetyana Sydorenko

Keyword(s):

Small And Medium Enterprises ◽

Full Range ◽

Business Environment ◽

Financial Inclusion ◽

Access To Finance ◽

Economic Competition ◽

Institutional Stability ◽

Regulatory Capacity ◽

Legal Frameworks ◽

Medium Enterprises

Countries in the MENAP and CCA regions have the lowest levels of financial inclusion of small and medium enterprises (SMEs) in the world. The paper provides empirical evidence on the drivers of SME access to finance for a large sample of countries, and identifies key policy priorities for these two regions: economic and institutional stability, competition, public sector size and government effectiveness, credit information infrastructure (e.g., credit registries), the business environment (e.g., legal frameworks for contract enforcement), and financial supervisory and regulatory capacity. The analysis also shows that improving credit information, economic competition, the business environment along with economic development and better governance would help close the SME financial inclusion gap between MENAP and CCA regions and the best performers. The paper concludes on the need to adopt holistic policy strategies that take into account the full range of macro and institutional requirements and reforms, and prioritize these reforms in accordance with each country’s specific characteristics.

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Financial Inclusion And The Growth Of Small Medium Enterprises In Uganda: Empirical Evidence From Selected Districts In Lango Sub Region

10.21203/rs.3.rs-49564/v1 ◽

2020 ◽

Author(s):

Marus - Eton ◽

Fabian Mwosi ◽

Constant Okello-Obura ◽

Abanis Turyehebwa ◽

Gilbert Uwonda

Keyword(s):

Financial Services ◽

Service Providers ◽

Small And Medium Enterprises ◽

International Markets ◽

Financial Inclusion ◽

Cross Sectional ◽

Policy Makers ◽

Correlation And Regression Analysis ◽

Small Medium Enterprises ◽

Medium Enterprises

Abstract The growth and failure of small and medium enterprises has been a topic of discussions world over amongst policy makers and researchers. This study was guided by the following objectives: To examine the contributions of Small Medium Enterprises (SMEs), to determine the challenges affecting Small Medium Enterprises, to examine how financial inclusiveness supports the growth of Small medium enterprises and to establish the relationship between financial inclusion and Small Medium Enterprises. The study used a cross sectional research design. Descriptive design was used and supplemented by inferential statistics. Correlation and regression analysis were adopted. The study revealed that financial inclusion is significant in supporting SMEs growth. The study also revealed that cost of acquiring and servicing financial services are high, there is also difficulty in using some of the financial services, and the way financial providers treat financial users, some lacked some degree of respect and dignity. The study recommends that financial providers should continue sensitizing the public on the available financial services beyond credit services, which are common and known. Digital financial service providers should encourage their clientele to use digitalized financial services which are cheap, secure and risk averse. Cost of capital should also be reduced to encourage borrowing while SMEs should innovatively produce goods that can be competitive at both domestic and international markets.

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Financial Inclusion and the Growth of Small Medium Enterprises in Uganda: Empirical Evidence from Selected Districts in Lango Sub Region

10.21203/rs.3.rs-49564/v2 ◽

2020 ◽

Author(s):

Marus Eton ◽

Fabian Mwosi ◽

Constant Okello-Obura ◽

Abanis Turyehebwa ◽

Gilbert Uwonda

Keyword(s):

Financial Services ◽

Service Providers ◽

Small And Medium Enterprises ◽

International Markets ◽

Financial Inclusion ◽

Cross Sectional ◽

Policy Makers ◽

Correlation And Regression Analysis ◽

Small Medium Enterprises ◽

Medium Enterprises

Abstract The growth and failure of small and medium enterprises has been a topic of discussions world over amongst policy makers and researchers. This study was guided by the following objectives: To examine the contributions of Small Medium Enterprises (SMEs), to determine the challenges affecting Small Medium Enterprises, to examine how financial inclusiveness supports the growth of Small medium enterprises and to establish the relationship between financial inclusion and Small Medium Enterprises. The study used a cross sectional research design. Descriptive design was used and supplemented by inferential statistics. Correlation and regression analysis were adopted. The study revealed that financial inclusion is significant in supporting SMEs growth. The study also revealed that cost of acquiring and servicing financial services are high, there is also difficulty in using some of the financial services, and the way financial providers treat financial users, some lacked some degree of respect and dignity. The study recommends that financial providers should continue sensitizing the public on the available financial services beyond credit services, which are common and known. Digital financial service providers should encourage their clientele to use digitalized financial services which are cheap, secure and risk averse. Cost of capital should also be reduced to encourage borrowing while SMEs should innovatively produce goods that can be competitive at both domestic and international markets.

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Financial inclusion and the growth of small medium enterprises in Uganda: empirical evidence from selected districts in Lango sub-region

Journal of Innovation and Entrepreneurship ◽

10.1186/s13731-021-00168-2 ◽

2021 ◽

Vol 10 (1) ◽

Author(s):

Marus Eton ◽

Fabian Mwosi ◽

Constant Okello-Obura ◽

Abanis Turyehebwa ◽

Gilbert Uwonda

Keyword(s):

Financial Services ◽

Service Providers ◽

Small And Medium Enterprises ◽

International Markets ◽

Financial Inclusion ◽

Cross Sectional ◽

Correlation And Regression Analysis ◽

Small Medium Enterprises ◽

Medium Enterprises ◽

The Cost

AbstractThe growth and failure of small and medium enterprises has been a topic of discussions world over among policymakers and researchers. This study was guided by the following objectives: to examine the contributions of small medium enterprises (SMEs), to determine the challenges affecting small medium enterprises, to examine how financial inclusiveness supports the growth of small medium enterprises, and to establish the relationship between financial inclusion and growth of small medium enterprises. The study used a cross-sectional research design. Descriptive design was used and supplemented by inferential statistics. Correlation and regression analysis were adopted. The study revealed that financial inclusion is significant in supporting SME growth. The study further also revealed that the cost of acquiring and servicing financial services is high; there is also difficulty in using some of the financial services, and the way financial providers treat financial users, some lacked some degree of respect and dignity. The study recommends that financial providers should continue sensitizing the public on the available financial services beyond credit services, which are common and known. Digital financial service providers should encourage their clientele to use digitalized financial services which are cheap, secure, and risk averse. The cost of capital should also be reduced to encourage borrowing while SMEs should innovatively produce goods that can be competitive at both domestic and international markets.

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