Policies to Address Supply-side Issues in MSME Finance: A Global Compilation

Abstract

Access to finance (A2F) for micro, small and medium-sized enterprises (MSMEs) is critical for their survival and development, yet such access remains constrained for many MSMEs worldwide. In this article, the authors identify some of the key issues on the supply side of MSME finance globally, such as the lack of a credit registry/over-reliance on collateral, over-reliance on debt finance, high transaction costs of serving MSMEs and lack of non-bank/specialty financial institutions. They pinpoint the root causes and trace their impacts using concrete examples. The authors then share policy prescriptions over the short, medium and long terms that have been collected from around the world to address these concerns. They also provide case studies as inspiration to policymakers and other stakeholders in MSME finance. This compilation is a handy resource for policymakers and other stakeholders in MSME finance to understand and overcome barriers on the supply side.