Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises
Job creation and economic growth through private sector development have become primary areas of focus for policy makers around the world in the aftermath of the global financial crisis. Recent evidence points to the importance of small and medium...
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| Format: | Working Paper |
| Language: | English en_US |
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International Finance Corporation, Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2013/01/24162672/closing-credit-gap-formal-informal-micro-small-medium-enterprises http://hdl.handle.net/10986/21728 |
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okr-10986-21728 |
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oai_dc |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCESS TO BANK ACCOUNTS ACCESS TO CREDIT ACCESS TO EDUCATION ACCESS TO FINANCE ACCESS TO FINANCIAL SERVICES ACCESS TO INFORMATION ACCESS TO MARKET ACCESS TO MARKETS ACCESS TO RESOURCES ACCESSIBILITY ACCOUNTING ACCOUNTS RECEIVABLE ADVISORY SERVICES AFFILIATES AGRICULTURAL ACTIVITIES AVAILABILITY OF CREDIT BANK ACCOUNT BANK ACCOUNTS BANK FINANCING BANK LENDING BANKING MODELS BANKING SECTOR BANKING SERVICES BANKS BORROWER BRANCH BRANCH NETWORK BRIBE BRIBES BUSINESS ASSOCIATION BUSINESS ASSOCIATIONS BUSINESS ENABLING BUSINESS ENABLING ENVIRONMENT BUSINESS OPPORTUNITY BUSINESS OWNERS BUSINESS PLAN CAPACITY BUILDING CAPITAL LOANS CAPITAL STOCK CASH FLOW CASH FLOWS CHECKING CHECKING ACCOUNT CHECKING ACCOUNTS COLLATERAL COLLATERAL REQUIREMENTS COMMERCIAL BANKING COMMERCIAL BANKS COMMERCIAL LOANS COMPANY COMPETITORS CONSULTING SERVICES CONTRACT ENFORCEMENT CORPORATION CORPORATIONS CORRUPTION COUNTRY COMPARISONS CREDIT BUREAUS CREDIT CONSTRAINT CREDIT DECISIONS CREDIT GAP CREDIT GUARANTEE CREDIT HISTORY CREDIT MARKET CREDIT RISK CREDITWORTHINESS CULTURAL BARRIERS CUSTOMER BASE DEMAND FOR CREDIT DEPOSIT DEPOSIT ACCOUNT DEPOSIT PRODUCTS DEPOSITS DEVELOPING COUNTRIES DEVELOPMENT FINANCE DEVELOPMENT FINANCE INSTITUTIONS E-LEARNING ECONOMIC ACTIVITY ECONOMIC COOPERATION ECONOMIC DEVELOPMENT ECONOMIC GROWTH EMERGING MARKETS EMPLOYER EMPLOYERS EMPLOYMENT GROWTH EMPLOYMENT OPPORTUNITIES ENTERPRISE FINANCE ENTREPRENEUR ENTREPRENEURIAL ACTIVITY ENTREPRENEURSHIP EXCLUSION EXTERNAL FINANCE FACILITATION FINANCE INITIATIVE FINANCIAL CRISIS FINANCIAL INFRASTRUCTURE FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL LITERACY FINANCIAL MARKETS FINANCIAL NEEDS FINANCIAL SERVICES FINANCIAL SERVICES FOR WOMEN FINANCIAL SUSTAINABILITY FINANCING SHORTFALL FIRMS FORMAL ECONOMY FORMAL FINANCIAL SECTOR FORMAL FINANCIAL SERVICES GENDER GENDER EQUALITY GREATER ACCESS GUARANTEE SCHEMES HUMAN CAPITAL HUSBAND ID INCOME GROUP INFORMAL ECONOMY INFORMAL FINANCE INFORMAL FINANCING INFORMATION DISSEMINATION INFORMATION SYSTEMS INFORMATIONAL ASYMMETRIES INSURANCE INSURANCE AGENCIES INTEREST RATES INTERNAL FUNDS INTERNATIONAL FINANCE INVENTORY JOB CREATION LACK OF ACCESS LACK OF COLLATERAL LACK OF CREDIT LACK OF INFORMATION LARGE ENTERPRISES LAWS LEASING LENDERS LIMITED ACCESS LIMITED ACCESS TO FINANCE LINES OF CREDIT LOAN LOAN GUARANTEES LOANS FOR WOMEN LOANS FOR WOMEN ENTREPRENEURS LOANS TO WOMEN MANAGEMENT INFORMATION SYSTEMS MANUFACTURERS MEDIUM ENTERPRISE MEDIUM ENTERPRISES MICRO ENTERPRISES MICRO-ENTERPRISES MICROENTERPRISES MICROFINANCE MICROFINANCE INSTITUTIONS MONETARY FUND MOVABLE COLLATERAL MULTINATIONAL MULTINATIONAL COMPANIES MULTINATIONALS NEEDS OF WOMEN NEEDS OF WOMEN ENTREPRENEURS NET LOSS NEW BUSINESSES NEW MARKET NEW MARKETS OUTREACH OVERDRAFT OVERDRAFTS PARTIAL CREDIT PARTIAL GUARANTEE PEER REVIEW PENETRATION RATES POINT OF SALE PRIVATE COMMERCIAL BANKS PRIVATE COMPANIES PRIVATE CREDIT PRODUCTIVITY PROFITABILITY PROPERTY LAW PUBLIC FUND PUBLIC POLICY REAL ESTATE REAL SECTOR RECEIPTS REGISTRATION PROCESS REGULATORY BURDEN REGULATORY REFORM REGULATORY REFORMS RETURN ON INVESTMENT RISK MANAGEMENT SAVINGS SAVINGS ACCOUNTS SECURITIES SHOPS SIZE OF FIRM SMALL BUSINESS SMALL BUSINESS BANKING SMALL ENTERPRISES SMALL FIRMS SMART CARDS SME SME FINANCE SME FINANCING SME LENDING SME SECTOR SOCIAL SECURITY STATE OWNED BANKS STORE SUBSIDIARY SUPPLIERS SUPPLY CHAIN SUPPLY CHAINS TAX LIABILITY TERMS OF LOANS TIME DEPOSITS TRANSACTION COSTS TRANSPORTATION SERVICES UNEMPLOYMENT WOMAN WOMEN ENTREPRENEURS WORKING CAPITAL |
| spellingShingle |
ACCESS TO BANK ACCOUNTS ACCESS TO CREDIT ACCESS TO EDUCATION ACCESS TO FINANCE ACCESS TO FINANCIAL SERVICES ACCESS TO INFORMATION ACCESS TO MARKET ACCESS TO MARKETS ACCESS TO RESOURCES ACCESSIBILITY ACCOUNTING ACCOUNTS RECEIVABLE ADVISORY SERVICES AFFILIATES AGRICULTURAL ACTIVITIES AVAILABILITY OF CREDIT BANK ACCOUNT BANK ACCOUNTS BANK FINANCING BANK LENDING BANKING MODELS BANKING SECTOR BANKING SERVICES BANKS BORROWER BRANCH BRANCH NETWORK BRIBE BRIBES BUSINESS ASSOCIATION BUSINESS ASSOCIATIONS BUSINESS ENABLING BUSINESS ENABLING ENVIRONMENT BUSINESS OPPORTUNITY BUSINESS OWNERS BUSINESS PLAN CAPACITY BUILDING CAPITAL LOANS CAPITAL STOCK CASH FLOW CASH FLOWS CHECKING CHECKING ACCOUNT CHECKING ACCOUNTS COLLATERAL COLLATERAL REQUIREMENTS COMMERCIAL BANKING COMMERCIAL BANKS COMMERCIAL LOANS COMPANY COMPETITORS CONSULTING SERVICES CONTRACT ENFORCEMENT CORPORATION CORPORATIONS CORRUPTION COUNTRY COMPARISONS CREDIT BUREAUS CREDIT CONSTRAINT CREDIT DECISIONS CREDIT GAP CREDIT GUARANTEE CREDIT HISTORY CREDIT MARKET CREDIT RISK CREDITWORTHINESS CULTURAL BARRIERS CUSTOMER BASE DEMAND FOR CREDIT DEPOSIT DEPOSIT ACCOUNT DEPOSIT PRODUCTS DEPOSITS DEVELOPING COUNTRIES DEVELOPMENT FINANCE DEVELOPMENT FINANCE INSTITUTIONS E-LEARNING ECONOMIC ACTIVITY ECONOMIC COOPERATION ECONOMIC DEVELOPMENT ECONOMIC GROWTH EMERGING MARKETS EMPLOYER EMPLOYERS EMPLOYMENT GROWTH EMPLOYMENT OPPORTUNITIES ENTERPRISE FINANCE ENTREPRENEUR ENTREPRENEURIAL ACTIVITY ENTREPRENEURSHIP EXCLUSION EXTERNAL FINANCE FACILITATION FINANCE INITIATIVE FINANCIAL CRISIS FINANCIAL INFRASTRUCTURE FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL LITERACY FINANCIAL MARKETS FINANCIAL NEEDS FINANCIAL SERVICES FINANCIAL SERVICES FOR WOMEN FINANCIAL SUSTAINABILITY FINANCING SHORTFALL FIRMS FORMAL ECONOMY FORMAL FINANCIAL SECTOR FORMAL FINANCIAL SERVICES GENDER GENDER EQUALITY GREATER ACCESS GUARANTEE SCHEMES HUMAN CAPITAL HUSBAND ID INCOME GROUP INFORMAL ECONOMY INFORMAL FINANCE INFORMAL FINANCING INFORMATION DISSEMINATION INFORMATION SYSTEMS INFORMATIONAL ASYMMETRIES INSURANCE INSURANCE AGENCIES INTEREST RATES INTERNAL FUNDS INTERNATIONAL FINANCE INVENTORY JOB CREATION LACK OF ACCESS LACK OF COLLATERAL LACK OF CREDIT LACK OF INFORMATION LARGE ENTERPRISES LAWS LEASING LENDERS LIMITED ACCESS LIMITED ACCESS TO FINANCE LINES OF CREDIT LOAN LOAN GUARANTEES LOANS FOR WOMEN LOANS FOR WOMEN ENTREPRENEURS LOANS TO WOMEN MANAGEMENT INFORMATION SYSTEMS MANUFACTURERS MEDIUM ENTERPRISE MEDIUM ENTERPRISES MICRO ENTERPRISES MICRO-ENTERPRISES MICROENTERPRISES MICROFINANCE MICROFINANCE INSTITUTIONS MONETARY FUND MOVABLE COLLATERAL MULTINATIONAL MULTINATIONAL COMPANIES MULTINATIONALS NEEDS OF WOMEN NEEDS OF WOMEN ENTREPRENEURS NET LOSS NEW BUSINESSES NEW MARKET NEW MARKETS OUTREACH OVERDRAFT OVERDRAFTS PARTIAL CREDIT PARTIAL GUARANTEE PEER REVIEW PENETRATION RATES POINT OF SALE PRIVATE COMMERCIAL BANKS PRIVATE COMPANIES PRIVATE CREDIT PRODUCTIVITY PROFITABILITY PROPERTY LAW PUBLIC FUND PUBLIC POLICY REAL ESTATE REAL SECTOR RECEIPTS REGISTRATION PROCESS REGULATORY BURDEN REGULATORY REFORM REGULATORY REFORMS RETURN ON INVESTMENT RISK MANAGEMENT SAVINGS SAVINGS ACCOUNTS SECURITIES SHOPS SIZE OF FIRM SMALL BUSINESS SMALL BUSINESS BANKING SMALL ENTERPRISES SMALL FIRMS SMART CARDS SME SME FINANCE SME FINANCING SME LENDING SME SECTOR SOCIAL SECURITY STATE OWNED BANKS STORE SUBSIDIARY SUPPLIERS SUPPLY CHAIN SUPPLY CHAINS TAX LIABILITY TERMS OF LOANS TIME DEPOSITS TRANSACTION COSTS TRANSPORTATION SERVICES UNEMPLOYMENT WOMAN WOMEN ENTREPRENEURS WORKING CAPITAL Stein, Peer Ardic, Oya Pinar Hommes, Martin Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises |
| description |
Job creation and economic growth through
private sector development have become primary areas of
focus for policy makers around the world in the aftermath of
the global financial crisis. Recent evidence points to the
importance of small and medium enterprises (SMEs) in
providing employment across countries. In addition to
employing the largest number of people in aggregate, SMEs
generate the most new jobs. But SMEs also face many
challenges in day-to-day operations and to grow. This note
is a report back on the state of the credit gap for MSMEs
with this new and updated data, while providing additional
focus on the sizable informal enterprise sector in the
developing world. In addition, this report examines various
operational challenges that small and informal firms face,
and some formalization obstacles they often cite as the
primary reasons for not registering their business. A
framework to differentiate the informal sector is offered,
with the intention of segmenting the vast landscape of
informal firms some of which exist today due to
opportunistic behavior, while others are just trying to
survive and to better design specific interventions
depending on the stage of development and the willingness of
the firm to register its business. The rest of this report
is organized as follows. Section I focuses on the credit gap
for formal MSMEs, and offers some innovative models and
interventions that can be used to more fully meet the
financial and non-financial needs of formal MSMEs. Section
II focuses exclusively on informal enterprises, and goes
beyond the access to finance paradigm, describing the
operational challenges faced by informal firms, reviewing
the experiments that have tried to induce higher rates of
formalization, and looking at a series of private sector
models that if combined, could more fully meet the needs of
informal firms. |
| format |
Working Paper |
| author |
Stein, Peer Ardic, Oya Pinar Hommes, Martin |
| author_facet |
Stein, Peer Ardic, Oya Pinar Hommes, Martin |
| author_sort |
Stein, Peer |
| title |
Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises |
| title_short |
Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises |
| title_full |
Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises |
| title_fullStr |
Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises |
| title_full_unstemmed |
Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises |
| title_sort |
closing the credit gap for formal and informal micro, small, and medium enterprises |
| publisher |
International Finance Corporation, Washington, DC |
| publishDate |
2015 |
| url |
http://documents.worldbank.org/curated/en/2013/01/24162672/closing-credit-gap-formal-informal-micro-small-medium-enterprises http://hdl.handle.net/10986/21728 |
| _version_ |
1764449067366088704 |
| spelling |
okr-10986-217282021-04-23T14:04:04Z Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises Stein, Peer Ardic, Oya Pinar Hommes, Martin ACCESS TO BANK ACCOUNTS ACCESS TO CREDIT ACCESS TO EDUCATION ACCESS TO FINANCE ACCESS TO FINANCIAL SERVICES ACCESS TO INFORMATION ACCESS TO MARKET ACCESS TO MARKETS ACCESS TO RESOURCES ACCESSIBILITY ACCOUNTING ACCOUNTS RECEIVABLE ADVISORY SERVICES AFFILIATES AGRICULTURAL ACTIVITIES AVAILABILITY OF CREDIT BANK ACCOUNT BANK ACCOUNTS BANK FINANCING BANK LENDING BANKING MODELS BANKING SECTOR BANKING SERVICES BANKS BORROWER BRANCH BRANCH NETWORK BRIBE BRIBES BUSINESS ASSOCIATION BUSINESS ASSOCIATIONS BUSINESS ENABLING BUSINESS ENABLING ENVIRONMENT BUSINESS OPPORTUNITY BUSINESS OWNERS BUSINESS PLAN CAPACITY BUILDING CAPITAL LOANS CAPITAL STOCK CASH FLOW CASH FLOWS CHECKING CHECKING ACCOUNT CHECKING ACCOUNTS COLLATERAL COLLATERAL REQUIREMENTS COMMERCIAL BANKING COMMERCIAL BANKS COMMERCIAL LOANS COMPANY COMPETITORS CONSULTING SERVICES CONTRACT ENFORCEMENT CORPORATION CORPORATIONS CORRUPTION COUNTRY COMPARISONS CREDIT BUREAUS CREDIT CONSTRAINT CREDIT DECISIONS CREDIT GAP CREDIT GUARANTEE CREDIT HISTORY CREDIT MARKET CREDIT RISK CREDITWORTHINESS CULTURAL BARRIERS CUSTOMER BASE DEMAND FOR CREDIT DEPOSIT DEPOSIT ACCOUNT DEPOSIT PRODUCTS DEPOSITS DEVELOPING COUNTRIES DEVELOPMENT FINANCE DEVELOPMENT FINANCE INSTITUTIONS E-LEARNING ECONOMIC ACTIVITY ECONOMIC COOPERATION ECONOMIC DEVELOPMENT ECONOMIC GROWTH EMERGING MARKETS EMPLOYER EMPLOYERS EMPLOYMENT GROWTH EMPLOYMENT OPPORTUNITIES ENTERPRISE FINANCE ENTREPRENEUR ENTREPRENEURIAL ACTIVITY ENTREPRENEURSHIP EXCLUSION EXTERNAL FINANCE FACILITATION FINANCE INITIATIVE FINANCIAL CRISIS FINANCIAL INFRASTRUCTURE FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL LITERACY FINANCIAL MARKETS FINANCIAL NEEDS FINANCIAL SERVICES FINANCIAL SERVICES FOR WOMEN FINANCIAL SUSTAINABILITY FINANCING SHORTFALL FIRMS FORMAL ECONOMY FORMAL FINANCIAL SECTOR FORMAL FINANCIAL SERVICES GENDER GENDER EQUALITY GREATER ACCESS GUARANTEE SCHEMES HUMAN CAPITAL HUSBAND ID INCOME GROUP INFORMAL ECONOMY INFORMAL FINANCE INFORMAL FINANCING INFORMATION DISSEMINATION INFORMATION SYSTEMS INFORMATIONAL ASYMMETRIES INSURANCE INSURANCE AGENCIES INTEREST RATES INTERNAL FUNDS INTERNATIONAL FINANCE INVENTORY JOB CREATION LACK OF ACCESS LACK OF COLLATERAL LACK OF CREDIT LACK OF INFORMATION LARGE ENTERPRISES LAWS LEASING LENDERS LIMITED ACCESS LIMITED ACCESS TO FINANCE LINES OF CREDIT LOAN LOAN GUARANTEES LOANS FOR WOMEN LOANS FOR WOMEN ENTREPRENEURS LOANS TO WOMEN MANAGEMENT INFORMATION SYSTEMS MANUFACTURERS MEDIUM ENTERPRISE MEDIUM ENTERPRISES MICRO ENTERPRISES MICRO-ENTERPRISES MICROENTERPRISES MICROFINANCE MICROFINANCE INSTITUTIONS MONETARY FUND MOVABLE COLLATERAL MULTINATIONAL MULTINATIONAL COMPANIES MULTINATIONALS NEEDS OF WOMEN NEEDS OF WOMEN ENTREPRENEURS NET LOSS NEW BUSINESSES NEW MARKET NEW MARKETS OUTREACH OVERDRAFT OVERDRAFTS PARTIAL CREDIT PARTIAL GUARANTEE PEER REVIEW PENETRATION RATES POINT OF SALE PRIVATE COMMERCIAL BANKS PRIVATE COMPANIES PRIVATE CREDIT PRODUCTIVITY PROFITABILITY PROPERTY LAW PUBLIC FUND PUBLIC POLICY REAL ESTATE REAL SECTOR RECEIPTS REGISTRATION PROCESS REGULATORY BURDEN REGULATORY REFORM REGULATORY REFORMS RETURN ON INVESTMENT RISK MANAGEMENT SAVINGS SAVINGS ACCOUNTS SECURITIES SHOPS SIZE OF FIRM SMALL BUSINESS SMALL BUSINESS BANKING SMALL ENTERPRISES SMALL FIRMS SMART CARDS SME SME FINANCE SME FINANCING SME LENDING SME SECTOR SOCIAL SECURITY STATE OWNED BANKS STORE SUBSIDIARY SUPPLIERS SUPPLY CHAIN SUPPLY CHAINS TAX LIABILITY TERMS OF LOANS TIME DEPOSITS TRANSACTION COSTS TRANSPORTATION SERVICES UNEMPLOYMENT WOMAN WOMEN ENTREPRENEURS WORKING CAPITAL Job creation and economic growth through private sector development have become primary areas of focus for policy makers around the world in the aftermath of the global financial crisis. Recent evidence points to the importance of small and medium enterprises (SMEs) in providing employment across countries. In addition to employing the largest number of people in aggregate, SMEs generate the most new jobs. But SMEs also face many challenges in day-to-day operations and to grow. This note is a report back on the state of the credit gap for MSMEs with this new and updated data, while providing additional focus on the sizable informal enterprise sector in the developing world. In addition, this report examines various operational challenges that small and informal firms face, and some formalization obstacles they often cite as the primary reasons for not registering their business. A framework to differentiate the informal sector is offered, with the intention of segmenting the vast landscape of informal firms some of which exist today due to opportunistic behavior, while others are just trying to survive and to better design specific interventions depending on the stage of development and the willingness of the firm to register its business. The rest of this report is organized as follows. Section I focuses on the credit gap for formal MSMEs, and offers some innovative models and interventions that can be used to more fully meet the financial and non-financial needs of formal MSMEs. Section II focuses exclusively on informal enterprises, and goes beyond the access to finance paradigm, describing the operational challenges faced by informal firms, reviewing the experiments that have tried to induce higher rates of formalization, and looking at a series of private sector models that if combined, could more fully meet the needs of informal firms. 2015-04-13T18:11:47Z 2015-04-13T18:11:47Z 2013-08 Working Paper http://documents.worldbank.org/curated/en/2013/01/24162672/closing-credit-gap-formal-informal-micro-small-medium-enterprises http://hdl.handle.net/10986/21728 English en_US CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo/ International Finance Corporation International Finance Corporation, Washington, DC Publications & Research Publications & Research :: Working Paper |