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Submitted by Marx Dambaza on
Dear Dr. Demirguc-Kunt, I am a follower of your work on SMEs and I am doing some research in Southern Africa on how best to measure credit risk for SMEs in a developing economy setup. It is a well known fact that SME growth is highly constrained by lack of access to financing, an issue not prevalent in the developed world. The major suppliers of external financing of this segment, banks regard lending to SME as the riskiest and unprofitable business. Banks are keen to take advantage of large numbers of these firms and cross selling and other benefits they can derive from financing SMEs, engines for any meaningful economic growth and development of any country because of fear of risk. So we are saying that if that risk could be measured for informed screening and underwriting thereby facilitating SME financing, a top priority of policymakers. Given the current disintermediation in financial sector, thining of profit margins, cut-throat competition and the advent of Basel II and III Capital Accords, commercial banks are realising the need to venture into SME lending business of which the majority of them lack the strategy to deal with the untraditional market. To cut the story short, the major problem I am currently encountering is that of lack of data access for modeling purpose. Yes local banks (South Africa and Zimbabwe, for example) agree that there is da challenge when it comes to SME financing but say they cannot divulge client data, due to the confidential and security nature, to researchers yet in literature most solutions to banks' problems are generated by academics especially in developed countries. Because of this, they are making the area unresearchable, for data is blood of any research. As a tried and tested researcher in this area, what would you advise me for I have passion for this type of research and also to acquire my PhD. I look forward to your piece of advice Marx