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SME Loan Defaults in Bangladesh

SME loan bangladesh

SMEs are vital for growth and jobs in Bangladesh, accounting for 40 per cent of all employment. In comparison with large enterprises and micro enterprises, SMEs have traditionally been underserved in terms of access to credit. However, more recently collateral-free  loans  through  bank  lending  have  become  available  to  SMEs with the central bank’s growing focus on SME financing. Although official statistics suggest that the SME loan default rate is about two per cent, it is  acknowledged  that  overall  SME  loan  default figures in Bangladesh may have reached five or six per cent. This  study  uses  survey data  gathered  from 96 SME  loan  recipients, now  in default, to explore the factors contributing to high SME default rates.

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