Leading Practices in MSME Financing: A Systematic Review
DOI:
https://doi.org/10.57125/FEL.2024.09.25.12Keywords:
MSME, start-ups, financing, venture capital, public lendingAbstract
SMEs in developing countries encounter obstacles in securing funding and obtaining financial services. The objective of this study was to analyse international SME financing practices and formulate recommendations for SME financing in developing countries. There remains a lack of structured and cohesive publications on this topic. Consequently, it is essential to integrate the research and findings regarding the effectiveness of various financing practices for SMEs. To achieve the research objective, mixed research consisting of qualitative and quantitative approach was used. This paper conducted a systematic literature review on SME financing for the period 2004–2024. PRISMA 2020 approach was used in order to select relevant studies. Countries such as Israel, Singapore and South Korea were selected to analyse the best practices of international SME financing experiences. The analysis showed that the government support is essential for business development, but its direction depends on the political system and cultural characteristics of the country. For example, Israel effectively implements in practice such areas of SME financing as: military and intelligence requirements, immigration policy, the investment in human capital, public-private cooperation programs for financing. For Singapore, the following practices are characteristic and effective: bureaucratic burden reduction, infrastructure development, fiscal policy adjustment through tax rate reduction, and investment in human capital as well as research, innovation, business support through public-private co-investment programs. For South Korea, the characteristic direction of SME financing is to create its own credit support independent of external investors. In addition, the economic situation in each country plays an important role in the decision-making process of SME support. However, by focusing on the best practices of SME financing and implementing them in an integrated manner, developing countries can achieve similar success in this process. This study is scientifically significant because it has systematised the views on SME financing.
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