Determinants of Credit Accessibility to Small and Medium Enterprises (SMEs) in Bangladesh
DOI:
https://doi.org/10.64102/rujssbs.0466Keywords:
SME, financial leverage, accounting statement, financing difficulties, adverse selectionAbstract
SMEs have been contributing a vital and vibrant role in promoting economic development, structural change, reducing hunger and poverty, and attaining sustainable Development Goals in Bangladesh. Their contribution to GDP is decreasing day by day in percentage. The major problem limiting the SME sector from contributing fully to the mainstream economy is the shortage of finance. The purpose of the study is to establish the determinant of factors influencing credit accessibility of SMEs based on the Trade-off Theory, Information Asymmetry Theory, and Pecking Order Theory. A deductive methodological approach has been used in this research. A conceptual model was developed, and a random sample survey of 350 SME owners or managers was conducted from the entire SME population. Only 25.97 percent of SME firms use commercial bank loans in Bangladesh. Quantitative data were analyzed using descriptive statistics, and multiple regression analysis was used to determine the relationship between dependent and independent variables. Determinant factors of debt accessibility of SME firms are the internal fund; financial information of the firm; firm age and firm size; profitability; and the sector. The research will help fill the research gap and will significantly contribute to the policy makers finding out the limited access to bank loans by the SME firm. The research paper uses a detached approach from the previous studies with Ramsey's Tests for Model Specification Error to rummage through different ways.
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