Overcoming Barriers to Credit Availability for SMEs Dissertation

Overcoming Barriers to Credit Availability for SMEs - Dissertation ExampleIntroduction and Relation to Previous ResearchAvailability of finance for small and medium enterprises (SMEs) has been a topic of research among academicians since it impacts the economy of a nation (Beck and Demirguc-Kunt,2006 OECD,2004). One of the perennial problems faced by SMEs is the access to capital (Scholz,2007).There has been big research on why SMEs find it difficult to obtain funding, why transparent SMEs stand better chance of finance availability than opaque SMEs, how financial support differs from traditional SMEs to innovative SMEs and what SMEs can do to improve their chances of obtaining funds, given that they function in a regulated environment. This topic is of interest since access to financing has been identify in many business surveys as one of the most significant obstacles to the survival and growth of SMEs (OECD,2004).It will be of value to understand what are the barriers that hol d out in financing of SMEs and what can be done both by financial Institutions and SMEs to overcome the same.Barriers to SME FinancingAccording to OECD (2006) reasons identified for SMEs inability to procure finances especially in comparison with larger firms usually include Incomplete range of financial products and servicesRegulatory rigidities or gaps in the legal frameworkLack of information on both the banks and the SMEs side. Banks may avoid providing financing to certain types of SMEs, in particular, start ups and very small firms that typically lack sufficient collateral.