Promoting Small and Medium Enterprise Growth and Entrepreneurship in Developing Countries: Access to Finance

In this project, we explore how access to finance contributes to the growth of SMEs in an effort to help practitioners and policymakers design more efficient and effective interventions, as well as to extend the frontier of knowledge on the relationship between access to finance and firm growth. In order to examine these issues, we will explore two different lines of inquiry: facilitated customer screening by use of credit scoring models and enhanced contract enforcement through private sector innovations. For each line of inquiry, we will investigate the key research questions by leveraging rigorous, evidence-based research techniques across multiple projects in multiple countries. We expect to deliver 4 peer-reviewed articles, as well as the associated data sets. To ensure the results reach the key stakeholders in the policymaking community, we will also develop policy briefs and hold a working group for dissemination and training. This project has the potential to transform the way that developing country policymakers, development practitioners, and private sector actors work to increase access to finance by demonstrating the effectiveness of credit scoring for customer due diligence and private solutions for contract enforcement. By contributing to more effective access to finance development efforts and more cost-effective development interventions in the private sector, this project can make a real contribution to raising incomes, creating jobs, and reducing poverty around the world by leveraging market-based principles.