ISSN: 2225-8329
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Small and medium enterprises (SMEs) play an important role in any economy, especially in increasing Gross Domestic Product (GDP) and in addressing the problems of poverty and unemployment. In Jordan, these projects comprise about 90% of the total projects and occupy about 60% of the workforce and contribute about 50% of the GDP. However, they suffer greatly from the problem of providing the necessary funding to enable them to develop and continue. One of the most important sources of funding for these projects is the commercial banks. The study examined the real role played by these commercial banks in financing these projects in Jordan and found that commercial banks contribute only 10% of their total financing, this ratio is small and does not meet the purpose, The study found that commercial banks are reluctant to lend to small and medium enterprises for fear of failure of such projects and thus affect the volume of liquidity in banks. For these reasons, commercial banks do not offer any advantages to these projects either in terms of the interest rate or in terms of loan duration, grace periods, and guarantees. The results found that the state should intervene through the Central Bank and through the issuance of legislation through which commercial banks are guided to support such projects and increase the proportion of funding at the same time to protect the rights of depositors, and thus, achieve the goals of all parties.
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To cite this article: Shawaqfeh, G. N. (2019). Contribution of Commercial Banks in Financing Small and Medium Enterprises. Applied Study on Commercial Banks in Jordan, International Journal of Academic Research in Accounting, Finance and Management Sciences 9 (3): 230-239
Copyright: © 2019 The Author(s)
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