Semester “Spring 2011”
“SME Management (MGT601)”
This is to inform that Graded Discussion Board (GDB) Has been opened according to the following schedule
Schedule
Opening Date and Time
May 27, 2011 At 12:01 A.M. (Mid-Night)
Closing Date and Time
May 31, 2011 At 11:59 P.M. (Mid-Night)
Note: No extra or bonus/grace period is available for attempting GBD.
Discussion Question
“On what grounds generally and specifically SMEs are denied finance by the banking sector?"
Note: Please restrict your answer to one paragraph. You may use points to answer but in this case avoid unnecessary details.
Solution:
The capacity for SMEs to fulfill their potential in an economy depends on the availability of finance. SMEs face problems when accessing to bank finance due to a market failure in credit markets The small firm’s access to financing may either come from supply side market failure like rejection from the banks side for reasons not connected with the viability of the proposal or high risk and costs associated with such loans or demand side market failure insufficient information in the project proposal, high cost of bank credit etc. Firm characteristics affect SMEs ability to access to bank finance. Firm Size, age, ownership type, industry sector and location were identified as important variables under this category. Smaller firms are more likely to face limited access to finance. Age of the firm and access to credit sources of finance change over time is the key issue.
Solution:
The capacity for SMEs to fulfill their potential in an economy depends on the availability of finance. SMEs face problems when accessing to bank finance due to a market failure in credit markets The small firm’s access to financing may either come from supply side market failure like rejection from the banks side for reasons not connected with the viability of the proposal or high risk and costs associated with such loans or demand side market failure insufficient information in the project proposal, high cost of bank credit etc. Firm characteristics affect SMEs ability to access to bank finance. Firm Size, age, ownership type, industry sector and location were identified as important variables under this category. Smaller firms are more likely to face limited access to finance. Age of the firm and access to credit sources of finance change over time is the key issue.
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