M. Badrul Haider; T. Akhter
Volume 4, Issue 4 , October 2014, , Pages 295-308
Abstract
This paper aims to comprehend the intrinsic limitations of the market players in the financial system and how these create a situation of `missing middle` for small and medium industries (SME) financing in Bangladesh. A clear dualism prevails in the manufacturing industry of this country. While the SMEs ...
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This paper aims to comprehend the intrinsic limitations of the market players in the financial system and how these create a situation of `missing middle` for small and medium industries (SME) financing in Bangladesh. A clear dualism prevails in the manufacturing industry of this country. While the SMEs maintains the biggest share in establishments and employment creation, large enterprises (LEs) contributes to the massive amounts of manufacturing value addition. Banks and other financial institutions furnish bulk of their financing to the export oriented large industries. Based on three surveys of these industries conducted by the World Bank (WB), Center for Policy Dialogue (CPD) Bangladesh and other organizations, and related literature and other published data, inferences are drawn that efficiency of these industries could be enhanced through assuring their fair participation in the formal financial sector. The development of SMEs in Bangladesh may be concentrated on some high performing firms who lie in extremes, the top end or the lowest end of SME cluster. Formal financing problem is more acute for those who are in the middle of this segment. Unlike many other papers in this area, the current one for the first time tries to understand the extent of the financing gap for these `missing middle`.