Ullah, Mir Salim and Naiimi, Nasri and Mohd Yusof, Rosylin (2016) What size of opportunity will open to banks that penetrate the small and medium enterprise (SME) finance market at Lahore? The next great challenge for enterprising banks. The Social Sciences, 11 (13). pp. 3245-3251. ISSN 1818-5800

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Abstract

SMEs’ share in Pakistan’s formal loan portfolio is 6.5%.They obtain bulk of their finances from informal sources.This study is intended to determine the size of SME finance market, the principal informal sources and the volume of finances they provide.Primary data obtained from responses of 433 SMEs to a questionnaire has been used.The SMEs were randomly selected from market committees’ lists.The study found that entrepreneurs form Rotating Savings and Credit Associations (ROSCAs) for obtaining interest and Collateral-free financing.About 90% of the surveyed entrepreneurs retain membership in up to four ROSCAs each. ROSCAs distribute Rs. 468 million per month among the members. This amounts to an impressive Rs. 1.2 million to each SME. Pakistani banking system does not finance SMEs at such a rate.As a source of SME finance, banks’ role is only marginal. The figures represent a significant market awaiting penetration by entrepreneur banks. Banks can use these findings to help position themselves for a more affective role in the SME finance market.

Item Type:	Article
Uncontrolled Keywords:	SME, ROSCA, finance bank, market, source, entrepreneur
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Islamic Business School
Depositing User:	Dr. Nasri Naiimi
Date Deposited:	27 Apr 2017 04:52
Last Modified:	27 Apr 2017 04:52
URI:	https://repo.uum.edu.my/id/eprint/21884

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