Barriers and Strategies of Financial Inclusion of SME’s: A Lender and Borrower Perspective of Khyber Pakhtunkhwa
Abstract
Fostering financial inclusion of SMEs is one of the top priorities of State Bank of Pakistan and the Government of Pakistan. In this way, the State Bank of Pakistan has announced National Financial Inclusion Strategies (NIFS) under the banner of the NIFS 100days agenda in order to attain various targets including financial inclusion of SMEs by 2023. In this regard the research study is conducted to explore the demand-side barriers and supply-side barriers in the main stream of financial inclusion of Small and Medium-sized Enterprises (SMEs) and to provide comprehensive ways and strategies for greater financial inclusion. To fulfill the research aims, the research used a qualitative technique followed by thematic approach. Semi-structured interviews with SMEs and banks were used to acquire primary data. The report reveals a number of demand side constraints that SMEs encounter, such as financial illiteracy, lack of collateral, lack of financial statements, lack of information about accessible financial products and services, and many others; the supply side barriers that financial institutions confront in reaching out to and supporting SMEs include lengthy and complex procedure, demand of collateral, high transaction costs, and so on and other constraints. These demand-sides, supply-sides and other sides’ barriers contribute to SMEs' reluctance to participate with formal financial channels. In response to these impediments, the research developed a number of formal financial channels. In response to these barriers, the research established various strategies that incorporate both demand-side, supply-side and other side factors in order to create a conducive environment to SMEs' inclusion in the formal financial system.
Copyright Notice Submission of an article implies that the work described has not been published previously (except in the form of an abstract or as part of a published lecture or academic thesis), that it is not under consideration for publication elsewhere, that its publication is approved by all authors and tacitly or explicitly by the responsible authorities where the work was carried out, and that, if accepted, will not be published elsewhere in the same form, in English or in any other language, without the written consent of the Publisher. The Editors reserve the right to edit or otherwise alter all contributions, but authors will receive proofs for approval before publication. Copyrights for articles published in IJSSA journal are retained by the authors, with first publication rights granted to the journal. The journal/publisher is not responsible for subsequent uses of the work. It is the author’s responsibility to bring an infringement action if so desired by the author.