Banking and Financing Challenges for SMEs in Hong Kong (2013)

SME Financing Challenges Dissertation – Small and Medium Enterprises (SMEs) constitute a very significant sector of the economies of both developed and emerging countries. The presence of a healthy and growing SME sector is therefore crucial in many countries. Despite the growing importance of this sector, existing studies indicate that SMEs are still disproportionately disadvantaged in the access of credit hence limiting their growth potential. While focusing on SMEs in Hong Kong China, this study sought to examine the nature of financing challenges facing SMEs.

Further, the study sought to identify the difficulties in accessing external financing, as well as the nature of these challenges from both the demand and supply side perspective. A mixed method approach was used to collect relevant data from SMEs in Hong Kong. In particular, a questionnaire survey was administered to 50 SME owners and interviews conducted with a few of the respondents and bank managers, as well. The findings indicate that despite the various measures that stakeholders such as the government have put in place, significant financing issues are still present.

The problems are however not limited to the supply side but also the demand side. In particular, the risk of lending to SMEs is quite high as opposed to larger and well established firms. However, lendable SMEs are still disadvantaged due to the use of poor credit scoring methods. The study offers several recommends on how the finance gap can bridged such as the use of better screening and credit scoring methods. The overall aim of this research will be to examine the challenges facing the financing of SMEs. The study focuses on SMEs in Hong Kong China. It also discusses relevant financing issues in the mainland China due to the close association with Hong Kong in terms of financial and governance structures. The aim this study as explained above has further been broken down into the following objectives;

• To identify the difficulties experienced in accessing external financing by SMEs in Hong Kong, China
• To examine the nature of the challenges in financing for SMEs in Hong Kong from both the demand and supply side perspectives
• To examine the resultant constraints and effects facing SMEs and the Hong Kong economy due to existing SME financing issues
• To examine key parameters that can facilitate more effective financing of SMEs in Hong Kong, China

• 22,000 words – 68 pages in length
• Excellent use of literature
• Good analysis of subject area
• Well written throughout
• Includes questionnaire
• Ideal for MBA finance students

1 – Introduction
Background of the study
Significance of the study
Research aim and objectives
Structure of research

2 – Literature Review
Capital structure theories
Current financing challenges facing SMEs in Hong Kong
Supply side issues
Demand side issues
Firm specific and economic effects of inadequate access to finance
Bridging the finance gap
The current situation of SME financing in Hong Kong

3 – Methodology
Research philosophy
Research approach
Research strategy
Research design
Time horizons
Research instruments
Sampling technique
Data collection techniques
Questionnaire Design
An explanation of the questionnaire design
Demographic data
Current situation of the firm
Firm financing
Implementation
Data analysis
Ethical considerations

4 – Findings
Profile of respondents and interviewees
Profile of questionnaire respondents and nature of the businesses surveyed
Difficulties experienced in accessing external financing by SMEs in Hong Kong
Challenges in financing for SMEs in Hong Kong from both the demand and supply side perspectives
Constraints and effects facing SMEs and the Hong Kong economy due to existing SME financing issues
Questionnaire

5 – Conclusions
Difficulties experienced in accessing external financing by SMEs in Hong Kong
Nature of challenges in financing for SMEs in Hong Kong from both the demand and supply side perspectives
Constraints and effects facing SMEs and the Hong Kong economy due to existing SME financing issues
Bridging the finance gaps of SMEs in Hong Kong
Limitations of the study and directions for future research

References

Appendix Section