Entrepreneurs and SMEs financing in developing countries: do non-financial services improve access to finance?
Abstract
Purpose
Is access to finance a constraint for small and medium enterprises (SMEs) development or a result of SMEs constraint? Considering the demand-side of the credit market, this paper aims to assess the effect of nonfinancial services (NFS) on financial access through demand for financing (direct effect) and access to finance (indirect effect).
Design/methodology/approach
Using data from a five-year comprehensive entrepreneurship program on a package of technical assistance, the author uses two impact assessment methods: before/after and propensity score matching approaches.
Findings
The author found significant changes in business practices for treated SMEs and entrepreneurs since both the number and frequency of good business practices increased for most of the SMEs in the program with a positive turnover effect. Evidence of the positive effects of NFS on demand for financing is found in SMEs but this does not involve more access to finance. Despite positive changes in business practices, small-size entrepreneurs continue to self-exclude for financing.
Originality/value
Different pass-throughs are operating within this “recycling” of entrepreneurial resources over time. The author shows the effectiveness of the knowledge on financing mechanism, financial conditions and government financial support, even if these mechanisms do not seem to lead to a significant improvement in access to finance.
Keywords
Acknowledgements
The author would like to thank anonymous reviewers for their valuable contributions. The author would like to thank the Embassy of the Netherlands in Benin for financing the data collection as part of the final evaluation of the BeniBiz program. Finally, the author would like to thank Tatiana Goetghebuer and Nastassia Leszczynska from the Belgian office “Evidence for better policy” (ADE), who coordinated and ensured the quality of the data collection process.
Disclosure statement: No potential conflict of interest to be reported.
Citation
Babatoundé, A.L. (2024), "Entrepreneurs and SMEs financing in developing countries: do non-financial services improve access to finance?", Journal of Financial Economic Policy, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFEP-02-2024-0046
Publisher
:Emerald Publishing Limited
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