This VRL report tackles the main issues concerning best practice in SME banking
The majority (95 percent) of firms operating around the world are, in fact, SME's with European and Chinese SME's contributing 99.8 percent of the total. According to the World Bank, the SME sector can contribute to the GDP of high income countries by as much as 51 percent as opposed to middle and low income countries, where SME's produce up to 39 percent and 16 percent of local GDP. Moving to emerging Eastern economies, Indian SME output represents 45 percent of industrial production and 40 percent of total exports. Even more staggering is the contribution of Chinese SME's to the creation of the national taxable profit, 40 percent of total production. Judging from these figures, obstacles to funding means forcing SME's to downsize their businesses and ultimately exert a major influence on their country's wealth.
European and US SME's are still relatively well served (only between 12-14 percent of the high-income OECD countries are underserved or financially constrained), but economic conditions for businesses are getting tougher. SME's from emerging markets are equipped with more solid growth-driven potential. This growing involvement in new SME markets will, based on country specific evidence, contribute substantially to a bank's revenue. For example, Malaysian banks with a significant SME portfolio are expecting higher revenue growth due to a set of government projects deployed across the country to boost the economy.
By reading this report you will: