Syndicate content

Bank Lending to SMEs: How Much Does Type of Bank Ownership Matter?

Asli Demirgüç-Kunt's picture

Small and medium-size enterprises (SMEs) account for close to 60 percent of global manufacturing employment. So it is no surprise that financing for SMEs has been a subject of great interest to both policymakers and researchers. More important, a number of studies using firm-level survey data have shown that SMEs perceive access to finance and the cost of credit to be greater obstacles than large firms do—and that these factors really do constrain the growth of SMEs.

In recent years a debate has emerged about the nature of bank financing for SMEs: Are small domestic private banks more likely to finance SMEs because they are better suited to engage in “relationship lending,” which requires continual, personalized, direct contact with SMEs in the local community in which they operate? Or can large foreign banks with centralized organizational structures be as effective in lending to SMEs through arm’s-length approaches (such as asset-based lending, factoring, leasing, fixed-asset lending, and credit scoring)? And how well do state-owned banks—for which expanding access to finance is often among their top objectives—serve SMEs?

Growth identification and facilitation – let the debate begin

Célestin Monga's picture
 photo: istockphoto.com

In the famous movie Forrest Gump (1994), which is the story of an innocent man who represents how the world should be, the main character Tom Hanks remembers: “My Mama always said, ‘Life is like a box of chocolates; you never know what you’re gonna get.’” Development economists working on industrial policy should always keep in mind that motherly wisdom and maintain humility in their random quest for the recipe for economic growth.

In a recent paper on ‘Growth Identification and facilitation: The role of the state in the dynamics of structural change,’ Justin Yifu Lin and I have tried to suggest a rational way of looking at the trial-and-error process that successful economic development always involves. In a new post on his excellent blog ‘Africa Can,’ my colleague Shanta Devarajan welcomes our work but asserts that we gloss over the politics that underlie efforts by governments to guide certain industries toward success.

A Legion of (Wiki)Leaks

Shanthi Kalathil's picture

Just read a prescient New Yorker blog post on the sudden proliferation of plans for in-house Wikileaks-style operations at major media outlets. Al Jazeera started this trend with its "Transparency Unit," and the New York Times is now said to be developing something similar. It can't be long before others jump on the bandwagon. Author Raffi Khatchadourian (who authored this New Yorker profile of Julian Assange last year) does a nice job of attempting to map the just-emerging implications of this (possible) trend. Says Khatchadourian: "If the WikiLeaks model were to grow beyond WikiLeaks - much in the way social networking outgrew its earliest online incarnations - and develop more fully within the ambit of conventional media, it is likely that it would change in a way that reflects the different sources of authority that a stateless publisher and a conventional news organization each draw upon."

Getting beyond the “every country is unique” mantra

Brian Levy's picture

Moving away from ‘best practice’ thinking has profound implications for development policy work. The craft of policymaking is not simply about delineating the desirable: it is about finding entry points that are both feasible and value-adding. How is this to be done? After all, practitioners desire more guidance than the simple dictum that the answer is ‘country-specific’.

Liberal Constitutions and Elections Won't Do the Job

Sina Odugbemi's picture

This piece was originally contributed to the Governance for Development Blog.

_______________________

The entity often known as ‘the international community’ has a touching faith in standard liberal constitutions and one-person-one-vote elections. Now, while those are outstanding human inventions, it is becoming clearer every day that in plural, deeply divided societies these inventions alone will not lead to settled systems of governance.

What to Expect in Davos: Global Risk Landscape

Kevin Lu's picture

One of the four themes  in Davos this year is risk management. The World Economic Forum (WEF) issued a report titled Global Risks 2011 earlier this month. It provides a high-level overview of 37 selected global risks as seen by members of the WEF’s Global Agenda Councils and supported by a survey of 580 top leaders and decision-makers around the world.

Issues related to macroeconomic imbalances top the list.  These are a group of economic risks including currency volatility, fiscal crises and asset price collapse, which arise from the tension between the increasing wealth and influence of emerging economies and high levels of debt in advanced economies.

In addition, a number of risks are related to geopolitics. They include: corruption, geopolitical conflicts, global governance failures, illicit trade, organized crime, space security, terrorism, and weapons of mass destruction.

Seven steps to structural transformation

Shanta Devarajan's picture

 

 

 

 

 

 

 

 

 

 

 

 

 

My colleagues Justin Lin and Celestin Monga have proposed a six-step plan for identifying industries that could help developing countries industrialize. 

The first step in the plan is to find countries that have a per-capita income that is roughly double yours and have a similar endowment, and observe what they are producing.  These industries would then serve as the basis for possible government intervention to either protect or create, depending on the country’s situation.

However, the six-step plan seems to gloss over the fact that countries, even seemingly successful ones, produce certain goods for political rather than economic reasons. 

Global Preferential Trade Agreement Database (GPTAD)

World Bank Data Team's picture

The World Bank International Trade Department is pleased to announce the launch of the Global Preferential Trade Agreement Database (GPTAD).

The GPTAD provides information on preferential trade agreements (PTAs) around the world, including agreements that have not been notified to the World Trade Organization (WTO). It is designed to help trade policy makers, scholars, and business operators better understand and navigate the world of PTAs.

Safety in Numbers

Antonio Lambino's picture

A few days ago, The New York Times published a piece on Indian citizens who have been intimidated, harassed, and killed because they made access to information requests on questionable government activities.  Many previous posts on this blog have featured successes and failures regarding various country experiences on right/access to information laws and their uneven implementation.  We have discussed threats and violence experienced by courageous people who have attempted to use such laws to dig up corrupt practices occurring in their own backyards.  These individuals are especially brave because they are located where the many eyes and ears of the mighty and powerful can easily find them.  They have nowhere to hide. 


Pages