In the criteria set by the Islamic Microfinance Institutions, one important criterion is the business age of the Micro, Small and MediumEnterprises, because the business age is used to assess the consistency of the Micro, Small and Medium Business actors regarding the business they run. According to Ganyaupfu (2013) from the results of his research found that the length of running a business empirically has a positive and significant effect on business success. the findings of Alom et al. (2016) also state that the length of business has a positive effect on the success of MSMEs in Malaysia. The results of similar studies are also in line with the findings of Kemayel (2015) that business age has a significant effect on the success of MSMEs in Lebanon. Thus, the longer an organization operates, the more successful the organization is compared to other organizations operating in a shorter period of time (Nandita, 2018). This is the reason the managers of Islamic microfinance institutions provide easy access for MSMEs to conduct financing.
Experience shows that after the economic crisis of 1997-1998, several Small and MediumEnterprises (SMEs) could survive and continue to show their existence until now. It is recorded that in 2019, the number of entrepreneurs in Indonesia reached 3.1% of the total population in Indonesia, around 260 million or around 8.06 million people. This number exceeds international standards by 2%, even this year, the government is optimistic that it can reach 5%. A fairly high increase compared to 2017 was 0.43% of the total population of productive age. This percentage is also supported by data in the statistics center in 2019 that the contribution of Small and MediumEnterprises (SMEs) to Gross Domestic Product (GDP) reached 65% or around 2,394.5 trillion compared to last year which reached around 60.34%. This high percentage has a very significant impact on the welfare of the community, especially in the middle-income community.
Gender structure of founders indicates that 93.1.0% of firm owners in small and mediumenterprises are male, while only 6.9% are women. Such a structure of women's participation in the establishment of businesses remains small. However it should be noted that the trend of female participation in the establishment of enterprises has positive signs tend downs, but very slow
Abstract— The small and mediumenterprises (SMEs) are exposed to different kind of risks, which should be measured, identified, and controlled. Currently, different risk measures are used for finance, operation and management strategies. Therefore, a model able to identify and analyze different kind of risks is required for the enterprise. Then the evaluation and treatment of this risk should be done. One of the most popular and successful model used for studying enterprise risk is logit. In this paper, a model for risk identification in Mexican SMEs is presented. Qualitative and quantitative variables in a logit method are applied by performing a diagnosis using a Likert scale for evaluating enterprise’s areas. Besides, financial ratios are also included and relevant variables were obtained using a hypothesis test. This model is designed for different kind of SMEs, and its application depends on the variables that are evaluated. A practical example shows the benefits of significant variables that predict risk.
This paper draws on data from Uganda ’ s 2013 World Bank Enterprise Survey (WBES), which comprises data on 762 firms across Uganda to assess the effects of the business environment, with particular interest on the impact of finance on firm growth by focusing on differences across firm size. Unlike past studies, we use firm level data that allows us to interrogate whether the impact of the business environment is unbiased across firm size. Most importantly, this paper mitigates the risk of the potential measurement error, omitted variable bias, and endogeneity. The results suggest that micro, small, and mediumenterprises (MSMEs) in Uganda benefit more from financial access than large firms. These effects are stronger and more sustained among medium firms. The paper interprets these results as evidence that MSMEs are more credit constrained relative to large firms. The paper also discerns that while informality and poor regulatory environment may help divert economic activity from large firms to MSMEs, informality increases the vulnerability of MSMEs to corruption to sustain their informal and invisible status. The policy implication on size, efficiency, and dynamism of the business sector in Uganda is that there is a need to increase not only financial inclusion of MSMEs but also improve the general business environment, particularly the formalization of micro firms.
sector has become significant to economists and policymakers who are making decisions on financial and economic development around the globe. In addition, the SME sector forms the backbone of economic development. There are many advantages to SMEs in that they provide job opportunities for both skilled and unskilled people, contribute to gross domestic product (GDP), promote economic diversification, and reduce poverty. Globally, SMEs constitute up to 95 per cent of the world’s firms (International Trade Centre, 2015); according to International Labour Organization (ILO) (2015) estimations, there are 420 to 510 million SMEs worldwide, with the majority—365–445 million—being located in developing economies. Studies indicate that formal SMEs contribute up to 45 per cent of employment and 33 per cent of GDP in developing economies and nearly 64 per cent of the GDP and 62 per cent of employment in high-income countries (International Finance Corporation, 2013). The importance of SMEs is reflected in the fact that the World Bank Group’s SME finance portfolio includes almost USD 4.8 billion in active lending. As of January 2018, this group was supporting 61 lending projects in 47 economies around the world (World Bank Group, 2018). Despite their importance to economic output, SMEs are still inadequately supported financially, with inadequate access to finance being one of the main obstacles they face. Access to finance is a global challenge for both developed and developing countries. According to the World Bank (2015), the financing gap for micro, small, and mediumenterprises (MSMEs) in developing countries is approximately USD 2.4 trillion. Thus, “Islamic finance can play a significant role in closing the financing gap for SMEs” (World Bank, 2015, p. xi), because Islamicfinancial products are founded mainly on asset-based transactions, together with equity- based sharing of risk and profit. The relevance of Sharia-compliant SME financing and its risk-sharing characteristics has, from an economic development perspective, been recognised by various policymakers in different countries and by international bodies (World Bank, 2015). Therefore, policymakers and stakeholders should seriously consider promoting asset-backed and equity-based financialinstruments to leverage Islamic finance (World Bank, 2015).
The requirement for collateral is based on the credit assessment and the applicant’s risk profile. The main criterion is project viability. Other factors, such as applicant’s character and integrity, capacity to repay, capital commitment and condition of the business, will also be considered. The participating financial institution may also reject the application if it does not contain sufficient information for a credit assessment to be made. To assist the small and mediumenterprises, the Credit Guarantee Corporation also provides several credit guarantee schemes for the benefit of applicants with little or no collateral.
The Micro, Small and MediumEnterprises (MSMEs) sector acts a vital role in the growth of our country. These enterprises are creating employment, export, gross industrial value of output, investment in fixed assets, contributing to GDP, boost manufacture, service and infrastructure sectors .Government performs a major role in various levels like local, state and federal levels in formulating new policies with an aim of empowering, encouraging and facility growth, development and performance of MSMEs. Financial Intermediaries (FIs) are institutions or firms that mediate or stand between lenders and borrowers. FIs focus on assisting the MSMEs to grow through soft loans and other fiscal incentives. The financial intermediaries also have been developed to encourage MSMEs on both theoretical and empirical grounds .Therefore, in this paper; an attempt has been made to study the role and performance of financial intermediaries in promoting MSMEs in India.
Small and mediumenterprises (SMEs) play important role in economic growth and development of any nation especially the developing countries. SMEs has contributed to the development of many Asian countries such as China, Malaysia and India respectably. For example in India, SMEs account for 39 percent of manufacturing output and 33 percent of the country total exports (Gbandi and Amissah 2014). Additionally, SMEs reduce unemployment, increase local competition, improvement of local technology as well as developing local entrepreneurs (CBN 2011). Nevertheless, in Nigeria the story is different, SMEs in Nigeria is underperformed it’s accounted to only 1percent to the Nigerian GDP. The main problem affecting SMEs performance in Nigeria can be group into four main parts, Firstly lack of access to credit, secondly poor business environment, thirdly lack of access to modern technology and fourthly low managerial skills. The problem can be minimize if the SMEs fully funded. Financing of SMEs in Nigeria is very important if they are to perform the role of economic growth and development of Nigeria. The question here is that, what are the financial options of SMEs in Nigeria.
The domestic enterprises began to face fiercer competition, which under the rapid development in the global economy today and the market increasingly competitive. During the government work report of 2015, Prime Minister Li Keqiang first pro- posed that encouraging people to start their own business and to make innovations, so that can be a new engine of economic development under the China’s New Nor- mal. The leader of the economic reform is the micro, small and mediumenterprises. In addition to the support of policy from the government for SMEs in financing, the SMEs should try to reduce the cost of capital by business management. The SMEs also need to create unique core competitiveness, in order to gain a foothold in the ever-changing global market. Outsourcing as one of the important means to reduce operating costs, has been adopted by more and more enterprises. As an auxiliary function of enterprise, financial outsourcing is beneficial to reduce the management cost and improve the efficiency of management. It can also help SMEs focus on the core competitiveness of ascension. When SMEs enjoy the benefits of such financial outsourcing, they are also associated with the risk of outsourcing. If the enterprise does not have a clear understanding and effective management with the outsourcing risk, it will lead to the enterprise cannot reach the purpose of outsourcing, also called the failure of outsourcing activities. Therefore, while the SMEs choose financial out- sourcing, they must have the analysis and evaluation system of outsourcing risk. In this paper, based on the above analysis of the background, we study the risk of SMEs financial outsourcing. And after introducing the content and the status quo of finan- cial outsourcing, we discuss the financial risk when the enterprise using financial outsourcing, and classify the risk, then measure the risk response, which in order to offer the decision-making basis for the successful implementation of financial out- sourcing activities.
Small to mediumenterprises (SME) are strongly influenced by global challenges and business conditions changes. SME is rather an object than a subject of the business challenges. Any SME must be – due to its size and consequently due to its openness – even more dynamic than large enterprises. SME have insufficient resources to update or develop their software resources from scratch. Under these conditions the necessary preconditions of success is a proper reuse of software systems.
Small and MediumEnterprises (SMEs) in Greece like all the other SMEs worldwide, facing several risks like interest rate risks, raw material prices risks, e- business and technological risks, supply chain risks, growth risks, management and employees risks (Falkner et. al., 2015). Additionally, they are also facing several financial risks like the risk that springs from the heavy taxation and the very long time needed for getting back the money which the Greek state owns to them from Value Added Tax (VAT) returns which sometimes is over 4 years (CNN.gr., 2016), not to mention the major problem of having little or even no access to bank finance. By strengthen their risk management mechanisms they can face successfully such risks and achieve sustainability and growth.
Micro, small, and mediumenterprises (MSMEs) is a productive economic enterprises owned by individuals or business entity with net worth not more than the provisions in the legislation. The majority of MSMEs conduct financial, purchase and sale transactions, raw materials, finished goods, and the bill records, in the conventional paper-based. This raises a variety of issues such as financial calculation errors, damage or loss of paper records that could be at risk in a loss of information in it, along with the difficulty to process data into information needed in decision-making. In addition, the user’s computer literacy, is also a problem in itself, if MSMEs are required to use a computer system. Most users currently use a smartphone easier than to operate a computer. This is what underlies the development of mobile based financial management system for MSMEs. This system is expected to allow users to perform simple financial management process, management of raw materials and finished goods, as well as provide information that is useful in decision making through a smartphone. In the verification phase, the tests performed on the system that has been made, to ensure that the system is free from errors. While in the validation phase, conducted the interviewing process by users who have tried to use this system, to ensure that the systems are in accordance with the needs of the user. Based on test and interview results, it can be concluded that the mobile-based financial management system for micro, small, mediumenterprises can simplify the management of financial transactions, raw materials, finished goods, and also be able to present useful information in a report that is useful as a consideration in the decision by the MSMEs.
Malaysia is one of the leading Southeast Asian economies aiming of becoming a nation of high-income status by 2020. Over the years, the Malaysian economy has gone through a dramatic transformation from an economy dependent on agriculture and commodity export to a more diversified and open economy with a much greater global connection. The Real GDP growth rate on average of 6.4 percent per annum since 1970 (OECD,2016), which was crucial for the Malaysian government to address the development and equity agenda. Prior to the implementation of the New Economic Policy (NEP), Malaysia’s development policy was mainly focused on enhancing economic growth with a great focus on the export market. The economy achieved a decent average annual growth of 6 percent, but there was an inadequate emphasis on the distributional aspects, causing in socioeconomic inequalities among the ethnic groups with negative social consequences lead to a racial riot in 1969 (Economic Planning Unit,2017). It was after this incident; the Malaysian government decided to introduce the NEP in order to address the socio-economic problems. This policy combined growth aspirations with the main objective of forming a fair, just and unified nation. Unlike other nations where the lower of the income bracket is comprised of ethnic minorities, the Malay majority in Malaysia earns lower incomes despite being more than half of the total population. (Saari, Dietzenbacher, Los, 2015). The NEP was implemented with two key objectives, that is to eradicate poverty regardless of ethnicity and to ensure economic opportunities were available to all Malaysians regardless of background. The importance of SMEs in Malaysia can be traced back to the early 1970s with the implementation of the NEP targeted enhancing people’s well-being and addressing the economic disparity of the various races. This is done through restructuring of the society aimed at attaining income parity and employment opportunities for all. The NEP set a restructuring target of 30: 40: 30, whereby 1990, the holdings of the Bumiputeras should reach 30 per cent, other Malaysians 40 per cent and the foreigners 30 per cent, in the context of an expanding economy marked the beginning of a much active participation of Bumiputras in businesses, which includes the formation of micro, small and mediumenterprises.
The Zimbabwe business story post 2009 cannot be complete without the role of SMEs. In the European Union, SMEs contribute to over 99% of all enterprises and 100 million jobs, representing 67.1% of private sector employment (International Financial Accounting Committee (IFAC), 2010). UK SMEs are mainly involved in the agricultural, business and construction sectors; South African SMEs are prominent in community, social and personal services and the finance, real estate, wholesale and agriculture sectors; and in Kenya SMEs are mainly involved in agricultural activities (Association of Chartered Certified Accountants (ACCA), 2000). SMEs are estimated to represent more than 95 per cent of all entities, according to the IFRS Foundation (2010).According to Gono (2013), SMEs contribute to output and employment creation and they are also a nursery for the larger firms of the future. The most successful developing country over the last 50 years, Taiwan is built on a dynamic SME sector. Small and mediumenterprises (SMEs) have played a significant role in Taiwan‟s economic development in expanding exports and providing jobs. According to Nyoni (2012), Zimbabwe Co-operative Development Minister, SMEs contributed above 60% of employment in the country.
Small and mediumenterprises (SMEs) play a vital role in the growth of the economy and have become a major concern for government and policy makers in developed, as well as in developing countries. Given the stated importance of SMEs in generating economic growth in Kuwait, it is essential that SMEs have access to sources of finance. However, access to finance is one of the major constraints to SME development, and is frequently mentioned in the entrepreneurship literature. This study aims to evaluate how Islamicfinancial institutions can support SMEs in Kuwait. The study adopts a qualitative approach that was articulated through a case study design. The case here is the phenomenon of SME financing as enacted by two organisational forms. This research uses two comparative cases; the cases are formed around the nature of the financing organisations in Kuwait and the interaction of SME owners with these organisations. Twenty face-to-face semi-structured interviews were conducted with members of three different groups: SME owner- managers, managers of financial institutions, and Sharia board members to explore their opinions and perceptions with regard to the role of Islamic finance for SMEs.
Another factor impeding the success of SMEs to access bank finance is their size and management structures. Other factors that have been mentioned by banks in declining funding proposals of SMEs include unconvincing business proposals, lack of track record and poor presentation. The problem of access is worse in the rural setting where SMEs do not have the necessary skills to develop their largely agro-based businesses to be well diversified and bankable (Swaziland SME Policy, 2002). Further to this, grants from donor bodies are scarce owing to the country's categorization as a middle income country. However, the Swaziland Finance Corporation (FINCORP) has over the years made great strides in availing funding to local enterprises (CDE, 2013).
In the current climate, access to finance is a key issue for SMEs and a key barrier to growth. In many instances companies may best be supported to ensure they are investment ready and that they have clear business plans in place in order to attract finance, but where it is clear that there is a finance gap, so councils have chosen to support local firms with loan finance, and can even make a commercial return doing so. Councils should consider whether they could play a more direct role in supporting innovative growth firms through strategic loan or equity funding. Many councils have already set-up special arm’s length organisations or ‘vehicles’ that can manage these investments and there are lessons to be learnt from this experience. It is important that such schemes have sufficient scale to ensure that they are operationally viable and it is essential that schemes draw upon commercial experience and expertise. However, when they are successfully introduced they can play an important role in the local finance market and small investments from councils, but councils should not feel as though they need to reinvent the wheel, there are already a number of vehicles out there that can manage small investments.
Siekei et al., (2013) assessed the possessions of budgeting skills on performance of SMEs and found that better presentation of SMEs in terms of sales increase and profitability is linked with proficiency on budgeting skills and business growth which is attained through finance education which enables the individuals to forecast sales and set achievable targets. Nonetheless, Fatoki (2014) indentified that smallenterprises operates informally in terms of expected income and expenditure lacking financial planning and measures as well. This is confirmed by Abanis, Sunday, Burani and Eliabu (2013) who found that most small businesses do not engage in formal financial planning and control and budgeting. Warue and Wanjira (2013) researched on hicaps of the businesses in Kenya and established that poor budgeting skills among Kenyans as a major contributor to the business failure in Kenya. FinAccess survey (FSD, 2009) exposed the fact that most people above 50% are not financially independent and lack control of the same inspite of them having an idea about budgeting. The above studies discloses a positive correlation between finance education and the individual performance such as the business portfolio, healthy debt administration, accumulated wealth and the business going concern strategies. On the other hand, escalating data shows there is a low level of financial literacy among grown-up across countries worldwide. This illiteracy is also higher amongst women than men which negatively impacts on their businesses.