We All Know That MSMEs Occupy A Prominent Place In The Policy Architecture Of Indian Economy Because Of Its Significant Contribution To The GDP, Matchless Capacity For Employment Generation And For Providing An Effective Medium For Growth Of Start-ups And Innovation.
As per IFC Report, 'Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises' , access to finance is one of the most important constraints faced by MSMEs, in addition to weak investment climate and poor infrastructure. The financing constraint is more severe in less-developed countries, where financial markets are not well-developed, regulatory and legal frameworks are weak, informational asymmetries are persistent, and risk management systems are not as robust. A developed financial sector helps mobilize and allocate resources, and manage risks, contributing to private sector development. Finance helps economic growth, and in turn, job creation. Data show that the financial sector provides more credit to the private sector and serves a larger proportion of firms in developed countries. Domestic private credit is around 150 percent of GDP in high income countries, while it is only around 30 percent in low income countries.
It further says that studies have underscored the importance of SMEs in contributing to growth and job creation, putting SME sector development among the key topics on the global development agenda and SMEs are closely linked with economic growth. For example, studies reveal that the relative size of the SME sector in a country and economic growth are positively related and formal SMEs contribute to 50 percent of GDP on average in high income countries. In addition, there is evidence that SMEs are the major sources of employment in many economies.
Challenge of Formal Finance
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Denne historien er fra February 2017-utgaven av SME World.
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