Abstract:
Bangladesh is trying to transform her economy from low income group to
upper middle income group economy. Small and Medium Business Enterprises
(SMBE) will be the key driver, steering this transformation of the Bangladesh
Economy. This is due to the fact that Small and Medium Business Enterprises
(SMBEs) can not only be enterprising and innovative, but also create employment,
purchasing power capability, raise overall per capita income, empower the owners
of SMBE- specially women and improve standard of living. Though SMBEs operate
directly in the formal sector, but they also form indirectly a part of the informal
sector and have a multiplier effect on the formal sector. The main purpose of this
study is to investigate whether SMBEs financing through the formal banking sector,
to the borrowers, is supportive as per their perception? Quantitative and Qualitative
methodology were adopted to analyse both, the primary and secondary sources of
data. Time period of the study was from 15th November, 2014 to 31 March, 2015. A
questionnaire was prepared which was divided into three parts: demography; simple
binary data and Likert Scale were applied. Total numbers of respondents were 308.
On the basis of binary data, logit regression model was also tested. Result shows
that SMBE loan has positive impact on creation of employment opportunity and
income generation. From the Likert scale we observed borrowers’ perception and
mindset. Further, we analysed the secondary data which indicated that there was a
direct positive relationship between the number of women entrepreneurs’ and the
recovery rate- that is lower the number of women entrepreneurs, lower is the
recovery rate. The paper suggested a model for SMBEs.This paper further provides
few policy implications and recommendations such as; policy makers of the country
ought to keep supporting SMBEs through enhanced institutional support,
infrastructural support, ease of application procedure of SMBEs. SMBEs financing
should be raised in the green business and environmental friendly industries,
creation of more women entrepreneurs, corruption free banking system, corporate
governance and favourable guidelines and policies regarding SMBEs funding and
expansion of businesses at domestic and international level.
