SMEs comprise the overwhelming majority of firms in almost all countries, and contribute to at least two thirds of total employment. New firms in any year account for around 5 per cent of all jobs in that year. As well as creating jobs, SMEs and entrepreneurs drive economic growth through their contribution to innovation and productivity growth.
However, access to finance is a major barrier to SMEs and entrepreneurs, who consistently report problems in obtaining external financing. In part, this is because these businesses seek small scale lending, which might not compensate banks for their monitoring and screening costs. Unproven business models also make new entrepreneurs relatively risky. Lack of collateral, demand for longer maturities, and information opacity strengthen the magnitude of the problem.
This collaboration between OECD and the Asian Development Bank on SME and entrepreneurship financing in OECD and Asian countries provides some concrete tools to support policymakers in design appropriate responses to the finance challenge.
Read the full report ADB-OECD Study on Enhancing Financial Accessibility for SMEs: Lessons from Recent Crises.