Title: Factors affecting SMEs' access to bank finance: an evidence from Sri Lanka

Authors: Asankha Pallegedara

Addresses: Passau University, 94032 Passau, Germany

Abstract: Small and medium scale enterprises (SMEs) make a large part of Sri Lanka's economy, accounting for about 80% of all businesses. The main purpose of this study is to examine the factors influencing the SMEs' access to bank finance provided by commercial banks and other financial institutions in Sri Lanka. This study utilises data collected from randomly selected 149 SMEs in Colombo and Matara districts of Sri Lanka. The analysis of data was conducted using quantitative techniques such as descriptive statistics and econometric estimations. The quantitative analyses were further supplemented by qualitative findings to explore the perceptions of the SME owners. The findings reveal that firms with higher monthly income are less likely to obtain bank loans. However, entrepreneur characteristics such as gender, age, religion and education level seem to have no influence on receiving bank finance by the SMEs. Findings of this work have broader policy recommendations for both banking service providers and policy makers.

Keywords: bank services; small and medium-sized enterprises; SMEs; Sri Lanka; access to finance; bank finance; SME funding; SME finance; average monthly income; financial institutions; high income; developing countries; probit model; econometrics; descriptive statistics; banking industry; bank loans; entrepreneurial characteristics; gender; age; religion; education level; entrepreneurship.

DOI: 10.1504/IJEBR.2017.081778

International Journal of Economics and Business Research, 2017 Vol.13 No.1, pp.30 - 42

Received: 09 Apr 2016
Accepted: 27 Sep 2016
Published online: 24 Jan 2017 *

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