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IJSTR >> Volume 6 - Issue 11, November 2017 Edition

International Journal of Scientific & Technology Research  
International Journal of Scientific & Technology Research

Website: http://www.ijstr.org

ISSN 2277-8616

An Exploratory Study On Bank Lending To SME Sector In Bhutan

[Full Text]



Chokey Wangmo



SME, Bank Loans, Bhutan, Collateral, Internal Finance



This study examines the factors used by the banks to determine the outcome of loan applications of Small and Medium Enterprises (SMEs) in Bhutan. Inaccessibility to financing is one of the biggest challenges faced by the Bhutanese SMEs. This exploratory study is built on in-depth interview of 6 credit officials to understand the lending behaviour of banks towards SMEs. Thematic Analysis revealed that the bank loan accessibility was a function of firm and owner characteristics. The collateral and internal finance was found to be vital in determining SME’s accessibility to bank loans. SMEs’ inadequate financial information was a serious problem for the banks. Firm age, size and industry sector had a positive correlation with bank loan accessibility. The age and educational qualification of borrowers were also found to have a positive relationship while the gender of the owner did not have any effect on bank loan accessibility.



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