Problems and Prospects of SME Financing in Developing Countries: Evidence from Bangladesh

Abstract

The objective of this study to identify the problem areas and developmental issues attached to entrepreneurship related to small medium enterprises (SMEs) particularly in an underdeveloped country like Bangladesh. Small and medium-sized enterprises (SMEs) are the backbone of the national economy in Bangladesh. This sector is playing an important role to develop the economy of our country. The role SMEs sector is immense to alleviate the poverty from the country as well. Small and Medium enterprises are particularly suitable for the densely populated countries like Bangladesh where SME sector can provide huge employment opportunity with much lower investment. They are expected to create jobs, reduce poverty, and drive a resilient national economy. The International Monetary Fund (IMF) Country Report (2015)1indicated that SMEs in Bangladesh accounted for more than 99% of private sector industrial establishments and created job opportunities for 75%–85% of the nonagricultural labor force. Findings of this study are useful for entrepreneurs and policy makers of the country. In the paper a questionnaire has been constructed and used SPSS 20 version software to analyze the data. This paper is, therefore, an attempt to analyze various issues, prospects and challenges of financing this particular sector and find out the ways to overcome these challenges. It will also survey various literatures and reports on the concerned field and recommend supporting actions to help this highly prospective industrial sector to operate in a fully yielding manner.