Abstract: SME Banking has gained special prominence in recent years in developing countries because of the enormous entrepreneurial potential it can unleash if effectively used to finance the small and mid size business units. In South Asia most of the governments have been actively supporting the SME initiatives by undertaking policies that facilitate the growth of SME through institutional support and project financing. This paper takes the Bangladeshis economy as a test case to develop the model that may be used in the SME banking to identify, measure and evaluate the key parameters in the SME industry.
Introduction: SME Banking has been gaining momentum in recent years in Bangladesh as well as others South Asian countries financial institutions all have been paying an active role in the development, growth, and promotion of SMEs in this region. It has become imperative to formulate policies and strategies to ensure that both the institutional framework and financing mechanism are in place to facilitate the growth of SME industry in this region. Against such background, this paper proposes a functional framework for conducting Banking survey of the SME industry in South Asia using Bangladesh as the case model for conducting to such study.
* The overview of Bangladesh economy.
* The overview of SME financing.
* The participation of private sector in SME industry.
* Define the objectives and methods to be used.
* Understand the local SME market.
* To provide methodology and statistical tools required for undertaking the Banking survey. * To stipulate the data processing methods and quality monitoring schemes. * To develop analytical framework and project module to be used for the survey.
Methodology: The tools and techniques proposed are most commonly used statistical devices. The analytical tools have been suggested keeping in mind the potential size of the SME market in Bangladesh. References have been made from the academic books and journals. Wherever necessary similar works have been closely reviewed to ensure efficacy and relevance of the framework and project module which have been developed for conducting SME Banking survey in the future. Limitations: The framework developed may need to be customized to meet the unique make conditions of the SME industry of the particular country being surveyed upon to gauge the banking needs of the same. Bangladesh as a country is comparatively smaller in market size and less complex in market structure as opposed to a country like India which has bigger SME potential and diverse market composition. This paper only provides the basis framework and project design for undertaking the banking survey of SME market.
Bangladeshis Economy and Banking potential of SME market: Economic activity in Bangladesh is dominated by micro, small and a few medium sized enterprises, which are seen as the engine of urgently needed and broad based economic growth. The analytical framework proposed in this paper will help fill in the gap between what information the banks require and what information is available in the market on the SME sector in Bangladesh.
The Bangladeshis Macroeconomic context in Brief:
1. GDP Growth: Bangladesh is ma small country with a population and a small work force that rely mostly on capital intensive investments and have not sufficient contributed to a broad economic development and an equal distribution of welfare. 2. Sector shares: Contribution of agriculture to employment is high with over 80% of Bangladeshis total work force, while the contribution of industry and services is only 20%. 3. Economic Development: Industrial sector growth rates show that energy and construction are still the engines of growth, while manufacturing has played a less predominant role in particular during the most recent years of industrial development. 4. Employment: The World...