Current state, active practice and conditions of banking lending of small and medium enterprises of Ukraine
Journal Title: Економіка. Фінанси. Право - Year 2019, Vol 5, Issue
Abstract
The article assesses the current state of small and medium-sized businesses in Ukraine and its importance in the development of the domestic economy. The conditions for lending to this sector of the economy by Ukrainian banks and the problems it faces are analyzed. The effective ways to improve the efficiency of financing small and medium enterprises by improving their lending system are proposed. The article also stressed the need for state support, regulation and improvement of the mechanisms, forms and methods of managing the development of Ukrainian small and medium-sized businesses, and creating an institutional motivation to attract banks to lend to small and medium businesses in order to reduce the risk of loan defaults when lending to a specific sector of the economy. The gradual renewal of the economy requires the further development of small and medium-sized businesses in Ukraine, the existence of which is impossible without the use of credit funds. Banks are trying to continue to cooperate with SMEs, reducing the level of interest rates on loans, increasing the amount of loans for business development and their term, expanding the volume of banking products for SMEs. However, interest rates are still quite high, lending conditions are tough, and lending terms are short-term, which discourage a significant part of SMEs from attracting bank loans. In addition, high risks of lending to the SME segment, instability of the banking system of Ukraine, a significant proportion of overdue loans in the total amount of loans indicates a deterioration in the financial condition of business entities and an unstable economic situation in the state, in turn, discourages banks from working with SMEs. Consequently, to solve the problem of lending to small and medium-sized businesses in Ukraine, three parties play an important role – the state, the banking sector and enterprises, which should act as one.
Authors and Affiliations
Alla Hryhorivna Ivashchenko, Oksana Olehivna Shkolenko
Keywords
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