Paper

Developing Financial Structures to Foster Enterprise Development

Analyzing strategies for stimulating business enterprise finance

This paper argues that strategies for stimulating business enterprise finance should revolve around:

  • Establishing effective bank regulation and supervision;
  • Setting an appropriate positive real interest rate;
  • Reducing unnecessary government intervention, guidance, and direction;
  • Addressing the credit rationing and financial exclusion and other problems, such as inadequate competition in banking, that arise from market failures.

The paper further discusses issues such as:

  • Role of the financial sector in promoting the growth of enterprises;
  • Financial system restructuring, as a means of correcting broad policy-induced distortions;
  • Financing of SMEs and the role of development banks;
  • Possibility of utilizing venture capital;
  • Prospects for developing capital markets.

The paper concludes that Banks will continue to play a leading role in promoting the growth of enterprises, especially the SMEs, although over time stock markets will become increasingly important in most developing and transition economies.

About this Publication

By Mullineux, A.W., Murinde, V.
Published