The laxity or strictness of these influencers in the credit policies of banks and financial institutions directly reflect on their risk versus return equation. Similar studies in advanced economies have also brought up the significant credit gap in this segment.Ĭredit rating, business life cycle stage, repayment capacity and collateral availability are some of the key factors influencing credit decisions.
To put this in perspective, it amounts to about 29% of the GDP of developing economies. According to IFC, in developing economies alone, the financing gap in formal MSME credit is estimated to be $5.2 trillion, with an additional $2.9 trillion deficit in the informal sector. While the current public health-led global financial crisis has left the small business segment reeling, the reality is that there was never enough financing available for this sector despite wide recognition of its significance in terms of job creation, innovation and overall economic development. And for him among the key impediments, is the availability of adequate credit on conducive terms tops the charts. He believes that over the years, many research reports have clearly brought out the importance of this segment and have also highlighted various impediments to effective growth. James is active in the Banking Industry-standard group BIAN, chairing their Strategic Advisory Board. James Buckley is the Vice President & Head of Europe, Infosys Finacle where rapid changes in banking architectures and technologies are being reflected in Infosys’ offerings. According to a World Bank publication, small and medium enterprises represent 95% of registered firms in the world and account for more than 50% of jobs. If anything, COVID-19 has brought to the fore the critical role played by small businesses in economies – developed and developing alike.
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