Financing Sources and Problems of SMEs in Developing Countries: A Study based on Khulna Region of Bangladesh

Abstract

In pursuit of her economic development, Small and Medium Enterprises (SMEs) conquer leading positions in economy. The present study is conducted to analyze the problem of SMEs to collect fund in Khulna city. Data were collected from 100 SME units by using simple random technique. A structural questionnaire was developed to get the responses from different SME units in the country. For Bangladesh SMEs, it is assumed special significance for poverty reduction programme and potential contribution to the overall industrial and economic growth. Some of the constraints related SME financing are identified and some pointers for the future are provided through the study. Considering the importance this study has strived to identify those factors contribute the success of SMEs using causal model. Several factors were selected typically that affects the SME activities from previous literature. Important factors were identified first using rotated components matrix later regression statistics was applied to find out which are statistically significant. The SME owners collect their fund basically from some sources such as money lenders, private banks, state-owned banks, NGOs as well as specialized banks. They face various problems during the fund collection which are main focus in this study. In order to overcome the problems a few suggestions for the development of SMEs are given by the authors.

Keywords: SME Activities, Finance Khulna City, Bangladesh, Money Lenders, State-owned Bank, Private Bank, NGO, Specialised Bank

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