Limitations of small and medium business lending in Kazakhstan: factors affecting access to finance

This paper aims to investigate factors affecting the access of small and medium-sized enterprises (SMEs)
to external financing in Kazakhstan. The data set of this research is obtained from the Business Environment and Enterprise Performance Surveys (BEEPS) conducted by the World Bank in Kazakhstan in 2019. The results of the analysis showed that such factors as revenue, the availability of collateral, previously received loans, have a positive impact on the decision to grant a loan by financial institutions. However, the results of the analysis did not show a statistically significant effect of the size and age of the enterprise on access to credit, which was proved by a number of studies in other countries. The results of the analysis also showed that access to external financing is significantly limited for enterprises implementing innovative products or services, which is explained by the riskiness of these enterprises from the point of view of creditors. It is interesting to note that the analysis showed a statistically significant positive relationship between access to credit and a female manager, which proves that there is no discrimination on gender grounds when making a decision to issue a loan in Kazakhstan. The results obtained can be used to develop more effective conditions for lending to SMEs, as well as to improve scoring models for SMEs, where the main criteria may be the history and potential of the company, rather than the current financial situation and the availability of collateral.

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