SME Lending: Do Lending Technologies Matter? Sample Evidence from Zimbabwe
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Date
2013-10
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
World Review of Business Research.
Abstract
This paper examines and tests the claim that bank lending technologies are
responsible for the low volume of lending to SMEs in Zimbabwe. Based on a
survey of directors of SMEs and bank lending officers, tests are conducted to
determine if there is any evidence of discrimination against SMEs based on age,
management, size, and information attributes. The study reveals that application
of uniform lending criteria to SMEs and large corporates does not result in
discrimination against SMEs based on age, size, management, or information
attributes. Based on this evidence, the study submits that differences in SME
lending between foreign and indigenous banks are due to factors other than their
lending technologies. The study further provides rationale for collateral-based
lending in the SMEs sector in Zimbabwe. The study however questions the static
nature of lending technologies used by banks in Zimbabwe, in the wake of high
nonperforming loans.
Description
This is an article published in the journal of World Review of Business Research. The article examines the lending technologies used by Zimbabwean banks to lend money to SMEs. This is examined within the context of Black empowerment and indigenisation policy of Zimbabwe.
Keywords
Banking, SMEs, Lending Technologies, Zimbabwe, Black Empowerment, Indegenisation, Financial sector
Citation
Nyangara, D. 2013. SME Lending: Do Lending Technologies Matter? Sample Evidence from Zimbabwe. World Review of Business Research,Vol. 3. No. 4. pp. 219 – 230.