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Publication Title: The causal relationship between SME sustainability and banks’ risk
Authors: Shihadeh, Fadi
Gamage, Sisira Kumara Naradda
Hannoon, Azzam
Keywords: Sustainable development
bank’s risk
non-performance loan
Issue Date: 10-Sep-2019
Publisher: Taylor & Francis
Citation: Fadi Shihadeh, Sisira Kumara Naradda Gamage & Azzam (M. T) Hannoon (2019) The causal relationship between SME sustainability and banks’ risk, Economic ResearchEkonomska Istraživanja, 32:1, 2743-2760, DOI: 10.1080/1331677X.2019.1655465
Series/Report no.: 32;1
Abstract: This study aims to examine the influence of banks’ credit to SMEs on non-performing loans. Many studies find that access to financial sources has become an obstacle to the growth and sustainability of SMEs. This study uses theoretical and empirical approaches to support the study’s hypothesis. Data are presented for 15 banks in Palestine, covering the period 2006 to 2016.The study uses empirical techniques regarding to examine the relationship between the variables. Evidence shows that encouraging banks to lend more money to SMEs through the use of a guarantee fund could decrease their risk. Thus, enhancing credit to SMEs could improve the growth and sustainability of these firms. The study recommending policymakers and bank’s managers could develop their strategies according to SME’s needing. Therefore, enhancing the growth in these firms and reducing the bank’s risk. Furthermore, adopting the guarantee funds in developing countries could decrease the bank’s risk, thus lending more to SME. The value of this paper comes from the importance of SME in the economic growth and development sustainability. Therefore, there is a need to convince banks to enhance SME credit through a guarantee fund and that extending this type of credit would positively influence banks’ activities.
ISSN: 1848-9664
Appears in Collections:Business and Economics Faculty

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