Determinants of SME Access to Bank Finance
In this paper, we model the determinants of successful bank loan applications to Bank Al Tanmeyaby small and
medium-sized enterprises (SMEs) in Libya. The posited determinants of successful bank finance include firm size (in terms
of employment), the business sector of operation, the age of the business, and the age and level of education of the owner–
manager. All other things being equal, we find that older firms, more educated managers, and firms with a strong banking
relationship are more like to be granted loans, while older owner–managers, larger firms, and firms in the services industry
are less likely to be granted loans. The presence of business plans and attendance at training workshops appears to have little
influence on whether loans are granted. These findings suggest that banks loans in Libya are largely made on the strength of
the relationship between the bank and the SME rather than the financial statement-, asset-, or credit scoring-based
approaches to bank lending found in more developed economies with stronger banking sectors.
Index terms - Bank finance, Small and medium-sized enterprises, Firm factors, Owner–manager factors.