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Banker's credit evaluation of small businesses


Mahmood, Rosli (1995) Banker's credit evaluation of small businesses. Banker's Journal Malaysia, 89. pp. 26-27. ISSN 1026-9534

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Abstract

In Malaysia, the role of small businesses is not only recognised as a seed-bed for entrepreneurial talent, but they also act as generators for employment and anciallary to the larger industries. They tend to complement the larger firms in supplying the required intermediaries and inputs, and serving the markets that are not attractive to the larger firms. Generally, small businesses rely on credit facilities from financial institutions to finance their operations.Finance companies were only established in the 1960s to complement the activities of commercial banks, and specialised in short- to medium-term business finance and consumer loans.These two institutions are required by Bank Negara Malaysia to channel at least 20 percent of their loan portfolios to the small business sector.Most small business are still finding it difficult to obtain financial support and facilities because they are perceived as high risk and low margin borrowers.Since they do not have access to other formal financial markets due to their operational size, they must rely on commercial banks and finance companies.A better understanding of the decision-making process and procedures of these institutions for the extension of credit facilities can provide crucial insights to the small businessmen when applying for such loans.

Item Type: Article
Subjects: H Social Sciences > HG Finance
Divisions: College of Business
Depositing User: Prof. Dr. Rosli Mahmood
Date Deposited: 23 Jul 2013 08:00
Last Modified: 23 Jul 2013 08:00
URI: http://repo.uum.edu.my/id/eprint/8595

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