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Factors affecting SMEs' access to bank finance: an evidence from Sri Lanka

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  • Asankha Pallegedara

Abstract

Small and medium scale enterprises (SMEs) make a large part of Sri Lanka's economy, accounting for about 80% of all businesses. The main purpose of this study is to examine the factors influencing the SMEs' access to bank finance provided by commercial banks and other financial institutions in Sri Lanka. This study utilises data collected from randomly selected 149 SMEs in Colombo and Matara districts of Sri Lanka. The analysis of data was conducted using quantitative techniques such as descriptive statistics and econometric estimations. The quantitative analyses were further supplemented by qualitative findings to explore the perceptions of the SME owners. The findings reveal that firms with higher monthly income are less likely to obtain bank loans. However, entrepreneur characteristics such as gender, age, religion and education level seem to have no influence on receiving bank finance by the SMEs. Findings of this work have broader policy recommendations for both banking service providers and policy makers.

Suggested Citation

  • Asankha Pallegedara, 2017. "Factors affecting SMEs' access to bank finance: an evidence from Sri Lanka," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 13(1), pages 30-42.
    • Handle: RePEc:ids:ijecbr:v:13:y:2017:i:1:p:30-42
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