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World Bank's report on financial health and growth of small and medium enterprises

Improving the financial capability of SME decision makers can significantly boost SME growth and stimulate sustainable economic development in low- and middle-income countries, especially in areas with large informal job sectors.


World Bank Last Updated at 30 Jul 2018, 07:07 IST
World Bank's report on financial health and growth of small and medium enterprises
  • The project’s combination of self-assessment and direct testing methodologies, together with behavioral questions. (Image Credit: Twitter)

Financial capability goes beyond the knowledge of financial concepts and includes behaviors, skills, and attitudes that enable sound financial decision making. Owners and managers of small and medium enterprises (SMEs) require a distinct set of financial capabilities in order to manage finances and grow their businesses sustainably.

Improving the financial capability of SME decision makers can significantly boost SME growth and stimulate sustainable economic development in low- and middle-income countries, especially in areas with large informal job sectors.

This report details a World Bank Group project that designed and conducted pilot SME surveys in 24 countries and aimed to establish a comprehensive understanding of SME financial capability that is essential for designing policies to promote financial health in the SME sector.

The project's combination of self-assessment and direct testing methodologies, together with behavioral questions, yields a comprehensive view of SME financial capability that clearly identifies the clusters of vulnerable SMEs and recommended areas of policy intervention and support.

In contrast to the traditional assessments of SMEs based on their past performance, the project's new survey instrument offers identification of strengths and underperformance at earlier stages of the business development cycle, enabling early stage targeted policies to help SMEs improve performance and attract investors and technical support.


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