Working Paper Series: Special Edition of 2016 to 2018 Interns

Abstract SMEs are the main drivers of economic growth and employment in developing countries and emerging economies. However, they are often constrained when it comes to accessing financing for investments and expansion. In recognising the vital role that SMEs play in the ECCU and CARICOM region, it is important to garner a clear understanding of the underlying factors. That is, what leads to this access to credit constraint as it relates to SMEs? The paper uses surveys to investigate the determinants of access to credit and demand for credit using firm specific and credit assessment characteristics to determine which of these characteristics are more likely to lead firms to become constrained or discouraged. Findings suggested that size among other firm characteristics as well as credit assessment characteristics do have a significant impact on both the supply and demand for credit. Country variables were found to impact on supply and demand for credit negatively suggesting the need for government intervention. Policy analysis is conducted on some possible solutions to increase access to financing in the region.

Keywords: SMEs, Determinants, Constraints, Demand for Credit, Access to Credit, and SME Financing.

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