The world’s economic growth and prosperity is driven by industries creating goods and services of all kinds. These goods and services are mainly produced by small and medium-sized businesses, which are often owned by a single person or a small team of entrepreneurs and which are a driving force in job creation and local economic development. Financing small and medium-sized enterprises (SMEs) is challenging for financial institutions for a number of reasons, but especially because lack of information makes credit assessment difficult.
A number of factors affect SME finance. For example, some developed countries take a capitalistic approach with little government incentives for SME financing, while others leverage government guarantees to support lending to the SME sector. In emerging economies, SMEs are primarily financed from sources outside of the formal financial sector, which is expensive for the enterprise and can hinder its growth. In addition, new capital requirements and banking regulations imposed on financial institutions have made the financing of SMEs even more difficult and expensive. Against this backdrop, the
emergence of alternative, technology-enabled means of financing, such as crowdsourcing and business models based on advanced data-analytics, offer opportunities to advance financial inclusion for SMEs.
The World Economic Forum’s Global Agenda Council on the Future of Financing & Capital aims to provide thought leadership to industries that channel financing and capital into the real economy, with a particular focus on finance for SMEs. The council will investigate and propose transformative solutions for advancing this issue in the immediate future and in the long term.
Council Manager: Chris Dooley, Project Lead, Promoting Global Financial Inclusion, Financial Services Industries, firstname.lastname@example.org
Forum Lead: Giancarlo Bruno, Head of Financial Services Industries, Member of Management Committee, email@example.com