Bank credit as an alternative source of financing for SMEs

Abstract

Access to sources of finance is an important aspect for addressing issues such as growth, economics, and competition in most countries. The relationship between growth and development of the financial sector is clear. A greater development of the financial sector reduces the cost of capital and increases resource allocation (increasing the amount and quality of investment projects), generating with this economic growth. However, there are few studies that evaluate directly the supply and demand of credit for SMES as a source of financing in Mexico. Furthermore, there are knowledge gaps on the perception and specific needs around barriers and limits for financing SMES. As a result, this paper aims to determine the viability between the supply and the demand of credit in commercial sector SMEs in City Victoria, Tamaulipas. Following a qualitative multiple case study approach and using interviews to collect data, our results show that there is a partial credit supply for the needs of the firms in this study. This work takes an unconventional strategy by identifying the limitations not only from the business side but also from the experiences from the financial sector.