Evolution of Financing for smes in Ecuador: A Study in the Province El Oro
Main Article Content
Keywords
Financial institution, financial management, finance, SMEs, financial sector.
Abstract
Objective: this research aimed to examine the evolution of the credit portfolio for SMEs in Ecuador, focusing on the province El Oro to understand its impact on economic growth and business sustainability, particularly in light of recent global challenges. Method: the study was conducted under the positivist paradigm with a quantitative, analytical-descriptive approach and a non-experimental design. A survey was administered to 54 credit executives from banking institutions in the province. Results: several limitations hindering access to credit were identified, including restrictive commercial legislation, inadequate financial information, low billing levels, limited profitability expectations for long-term projects and technology investments, and the intersection of personal and business finances for some SME owners. These limitations lead to distortions and inefficiencies in the allocation of financial resources, particularly in working capital. Conclusions: the findings reveal that less than 1% of companies (large enterprises) account for 53.04% of the credit, while the remaining 99% of the business sector holds 30.88% of the province's total credit portfolio. For SMEs to access financing, it is crucial to demonstrate sustainable growth and efficient resource utilization, supported by reliable long-term financial records.
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References
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Bairagi, V., & Munot, M. (2019). Research Methodology: A Practical and Scientific Approach. CRC Press. https://doi.org/10.1201/9781351013277
Barton, & Matthews. (1989). Small Firm Financing: Implications from a Strategic Management Perspective. Journal of Small Business Management, 22(6) 613-673. https://www.semanticscholar.org/paper/Small-Firm-Financing%3A-Implications-from-a-Strategic-Barton Matthews/92f0d02db7e1d16d96bdbf54a67b6d67985bc484.
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Bernanke, B. S. (2023). Nobel Lecture: Banking, Credit, and Economic Fluctuations. American Economic Review, 113(5), 1143-1169. https://doi.org/10.1257/aer.113.5.1143
Bertoni, F. C. (2023). The long-term effects of loan guarantees on SME performance. Journal of Corporate Finance (80), 1-19. https://doi.org/10.1016/j.jcorpfin.2023.102408
Briozzo, A., & Vigier, H. (2012 ). The effect of life cycles on diversification of financing sources for SMEs: Evidence from Argentina. African journal of business management, 6(3). 811-826. https://doi.org/10.5897/AJBM11.830
Chant, E. M., & Walker, D. A. (1988). Small business demand for trade credit. Aplied Economics, 20,861-876. https://doi.org/10.1080/00036848800000012
Chávez Cruz, G. C. (2018). Las micro, pequeñas y medianas empresas. Clasificación para su estudio en la carrera de Ingeniería en Contabilidad y Auditoría de la Universidad Técnica de Machala. CONRADO | Revista pedagógica de la Universidad de Cienfuegos, 14(65), 247-255. http://conrado.ucf.edu.cu/index.php/conrado
Corredera, F., Di Pietro, F., & Trujillo, A. (2021). Post COVID 19 SME fnancing constraints and the credit guarantee scheme solution in Spain. Journal of Banking Regulation (22), 250-260. https://doi.org/10.1016/j.ijinfomgt.2023.102637.
Costa, R., Haftor, D., & Staniewski, M. (2023). Using machine learning to create and capture value in the business models of small and medium-sized enterprises. International Journal of Information Management, 1-14. https://doi.org/10.1016/j.ijinfomgt.2023.102637.
Diamond, D., Hu, Y., & Rajan, R. G. (2022). Liquidity, pledgeability, and the nature of lending. Journal of Financial Economics, 143(3), 1275-1294. https://doi.org/10.1016/j.jfineco.2021.05.005
Doruk, Ö. T. (2023). Does Islamic banking reduce the risks of COVID-19 for SMEs? Novel evidence for SME financing in the pandemic period for an emerging market. International Journal of Disaster Risk Reduction, 1-19. https://doi.org/10.1016/j.ijdrr.2023.103664
ECB. (2015). Survey on the access to finance of enterprise in the euro. https://www.ecb.europa.eu/stats/ecb_surveys/safe/html/index.en.html
Fabio Bertoni, M. G. (2023). The long-term effects of loan guarantees on SME performance. Journal of Corporate Finance, 80, 1-19. https://doi.org/10.1016/j.jcorpfin.2023.102408
Fantinelli, N., & Lana, J. (2023). Teoria da agência aplicada ao setor público: uma pesquisa bibliométrica e agenda de pesquisa. Revista Brasileira de Administração Científica, 13(2), 1-13. https://doi.org/10.6008/CBPC2179-684X.2022.002.0018
Feijó, N., Ceular, N., & Navajas, V. (2023). Behavioral Patterns That Influence the Financing Choice Models of Small Enterprises in Ecuador through Latent Class Analysis. Sustainability, 15, 1-17. https://doi.org/10.3390/su15086790
Gur, N. B. (2023). Firm Size and Financing Behavior during COVID-19 Pandemic: Evidence from SMEs in Istanbul. Borsa Istanbul Review, 804-817. https://doi.org/10.1016/j.bir.2023.02.001
He, Z., & Hu, Y. (2023). Banks and financial crises: contributions of Ben Bernanke, Douglas Diamond, and Philip Dybvig. The Scandinavian Journal of Economic, 125(3), 553–583. https://doi.org/10.1111/sjoe.12535
Hogan, T., & Hutson, E. (2005). Capital structure in new technology-based firms. Global Finance, 12(1) 81-92. https://doi.org/10.1016/j.gfj.2004.12.001
Jayprakash, A., & Prelević, D. (2023). Epistemology of Modality and Philosophical Methodology. Taylor & Francis. https://doi.org/10.4324/9781003002192.
Kregel, J. (2014). Minsky and dynamic macroprudential regulation. PSL Quaterly Review, 67(269), 217-238. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2508188.
Kumar, K. (2022). Research Methodology in Social Science. K.K. Publications.
Łasak, P. (2022). The role of financial technology and entrepreneurial finance practices in funding small and medium-sized. Journal of Entrepreneurship, Management and Innovation, 18(1), 7-34. https://doi.org/10.7341/20221811
Lecuona, V. R. (2009). El financiamiento a las Pymes en México: La experiencia reciente. Economía UNAM, 69-91. https://www.scielo.org.mx/scielo.php?pid=s1665-952x2009000200004&script=sci_arttext
Liao, S. W. (2016). Decision sobre el precio del petroleo crudo bajo consideracion de emergencia y liberacion de reservas estrategicas de petroleo. https://www.sciencedirect.com/science/article/abs/pii/S036054421630086X?via%3Dihub
Liu, Y., Dilanchiev, A., Xu, K., & Merdan, A. (2022). Financing SMEs and business development as new post Covid-19 economic recovery determinants. Economic Analysis and Policy, 554-567. https://doi.org/10.1016/j.eap.2022.09.006.
Minola , T., Cassia , L., & Criaco , G. (2013). Financing patterns in new technology based firms have information investors do not have. 19 (2) 212-233. https://doi.org/10.1504/IJESB.2013.054964
Minsky, H. P. (1977). Banking and a fragile financial environment. The Journal of Portfolio Management, 3(4), 16-22. https://doi.org/10.3905/jpm.1977.408609.
Mirza, N., Afzal, A., Umar, M., & Skare, M. (2023). The impact of green lending on banking performance: Evidence from SME credit portfolios in the BRIC. Economic Analysis and Policy, 77, 843-850. https://doi. org/10.1016/j.eap.2022.12.024.
Nawazish Mirza, A. A. (2023). The impact of green lending on banking performance: Evidence from SME credit portfolios in the BRIC. Economic Analysis and Policy, 77, 843-850. https://doi.org/10.1016/j.eap.2022.12.024
Proaño‐Rivera, B. &.‐D. (2024). ¿Son los bancos ecuatorianos lo suficientemente eficientes técnicamente para el crecimiento? Un estudio clínico. International Journal of Finance & Economics, 29(2), 2011-2029. https://doi.org/10.1002/ijfe.2775
Radicic, D., & Petković, S. (2023). Impact of digitalization on technological innovations in small and medium sized enterprises (SMEs). Technological Forecasting and Social Change, 191, 1-16. https://doi.org/10.1016/jtechfore.2023.122474.
Tugsal, O. (2023). Does Islamic banking reduce the risks of COVID-19 for SMEs? Novel evidence for SME financing in the pandemic period for an emerging market. International Journal of Disaster Risk Reduction, 1-19. https://doi.org/10.1016/j.ijdrr.2023.103664
Wang, F. Y. (2019). Analisis de carcteristicas multifractatales de la fluctuacion de los precios de futuros de petroleo crudo en China. http://dx.doi.org/10.1016/j.physa.2019.122021.
Akerlof, G. A. (1970). The Market for "Lemons": Quality Uncertainty and the Market Mechanism. The Quarterly Journal of Economics, 84(3), 488-500.
Amadasun, D., & Mutezo, A. (2022). Infuence of access to fnance on the competitive growth of SMEs in Lesotho. Journal of Innovation and Entrepreneurship, 1-20. Doi: 10.1186/s13731-022-00244-1
Anto, L. O., & Novitasari, I. (2023). Determinants of the quality of financial reports. International Journal of Professional Business Review, 8(3), 1-40. https://doi.org/10.26668/businessreview/2023.v8i3.1331
Anzules-Falcones, W. &.-V. (2023). Innovation capacity, entrepreneurial orientation, and flexibility: an analysis from industrial SMEs in Ecuador. Sustainability, 15(13), 1-24. https://doi.org/10.3390/su151310321
Attar, M. A. (2021). Growth, distribution and dynamic inefficiency in Turkey: An analysis of the naïve neoclassical theory of capital. Structural Change and Economic Dynamics, 59, 20-30. DOI: 10.1016/j.strueco.2021.07.008
Bacuilima, E., Morocho, J., Aguirre, J., Coronel, K., & Mora, P. (2023). Financing Ecuadorian Social Enterprises: What Is the Role of Impact Investment? Sustainability, 1-19. https://doi.org/10.3390/su151411210
Bairagi, V., & Munot, M. (2019). Research Methodology: A Practical and Scientific Approach. CRC Press. https://doi.org/10.1201/9781351013277
Barton, & Matthews. (1989). Small Firm Financing: Implications from a Strategic Management Perspective. Journal of Small Business Management, 22(6) 613-673. https://www.semanticscholar.org/paper/Small-Firm-Financing%3A-Implications-from-a-Strategic-Barton Matthews/92f0d02db7e1d16d96bdbf54a67b6d67985bc484.
Berger , A., & Udell, G. (1998 ). The economics of Small Business finance. The roles equity and debt markets in the financial growth cycle, Journal of Banking & Finance, 22(6-8). 613-673. https://doi.org/10.1016/S0378-4266(98)00038-7
Bernanke, B. S. (2023). Nobel Lecture: Banking, Credit, and Economic Fluctuations. American Economic Review, 113(5), 1143-1169. https://doi.org/10.1257/aer.113.5.1143
Bertoni, F. C. (2023). The long-term effects of loan guarantees on SME performance. Journal of Corporate Finance (80), 1-19. https://doi.org/10.1016/j.jcorpfin.2023.102408
Briozzo, A., & Vigier, H. (2012 ). The effect of life cycles on diversification of financing sources for SMEs: Evidence from Argentina. African journal of business management, 6(3). 811-826. https://doi.org/10.5897/AJBM11.830
Chant, E. M., & Walker, D. A. (1988). Small business demand for trade credit. Aplied Economics, 20,861-876. https://doi.org/10.1080/00036848800000012
Chávez Cruz, G. C. (2018). Las micro, pequeñas y medianas empresas. Clasificación para su estudio en la carrera de Ingeniería en Contabilidad y Auditoría de la Universidad Técnica de Machala. CONRADO | Revista pedagógica de la Universidad de Cienfuegos, 14(65), 247-255. http://conrado.ucf.edu.cu/index.php/conrado
Corredera, F., Di Pietro, F., & Trujillo, A. (2021). Post COVID 19 SME fnancing constraints and the credit guarantee scheme solution in Spain. Journal of Banking Regulation (22), 250-260. https://doi.org/10.1016/j.ijinfomgt.2023.102637.
Costa, R., Haftor, D., & Staniewski, M. (2023). Using machine learning to create and capture value in the business models of small and medium-sized enterprises. International Journal of Information Management, 1-14. https://doi.org/10.1016/j.ijinfomgt.2023.102637.
Diamond, D., Hu, Y., & Rajan, R. G. (2022). Liquidity, pledgeability, and the nature of lending. Journal of Financial Economics, 143(3), 1275-1294. https://doi.org/10.1016/j.jfineco.2021.05.005
Doruk, Ö. T. (2023). Does Islamic banking reduce the risks of COVID-19 for SMEs? Novel evidence for SME financing in the pandemic period for an emerging market. International Journal of Disaster Risk Reduction, 1-19. https://doi.org/10.1016/j.ijdrr.2023.103664
ECB. (2015). Survey on the access to finance of enterprise in the euro. https://www.ecb.europa.eu/stats/ecb_surveys/safe/html/index.en.html
Fabio Bertoni, M. G. (2023). The long-term effects of loan guarantees on SME performance. Journal of Corporate Finance, 80, 1-19. https://doi.org/10.1016/j.jcorpfin.2023.102408
Fantinelli, N., & Lana, J. (2023). Teoria da agência aplicada ao setor público: uma pesquisa bibliométrica e agenda de pesquisa. Revista Brasileira de Administração Científica, 13(2), 1-13. https://doi.org/10.6008/CBPC2179-684X.2022.002.0018
Feijó, N., Ceular, N., & Navajas, V. (2023). Behavioral Patterns That Influence the Financing Choice Models of Small Enterprises in Ecuador through Latent Class Analysis. Sustainability, 15, 1-17. https://doi.org/10.3390/su15086790
Gur, N. B. (2023). Firm Size and Financing Behavior during COVID-19 Pandemic: Evidence from SMEs in Istanbul. Borsa Istanbul Review, 804-817. https://doi.org/10.1016/j.bir.2023.02.001
He, Z., & Hu, Y. (2023). Banks and financial crises: contributions of Ben Bernanke, Douglas Diamond, and Philip Dybvig. The Scandinavian Journal of Economic, 125(3), 553–583. https://doi.org/10.1111/sjoe.12535
Hogan, T., & Hutson, E. (2005). Capital structure in new technology-based firms. Global Finance, 12(1) 81-92. https://doi.org/10.1016/j.gfj.2004.12.001
Jayprakash, A., & Prelević, D. (2023). Epistemology of Modality and Philosophical Methodology. Taylor & Francis. https://doi.org/10.4324/9781003002192.
Kregel, J. (2014). Minsky and dynamic macroprudential regulation. PSL Quaterly Review, 67(269), 217-238. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2508188.
Kumar, K. (2022). Research Methodology in Social Science. K.K. Publications.
Łasak, P. (2022). The role of financial technology and entrepreneurial finance practices in funding small and medium-sized. Journal of Entrepreneurship, Management and Innovation, 18(1), 7-34. https://doi.org/10.7341/20221811
Lecuona, V. R. (2009). El financiamiento a las Pymes en México: La experiencia reciente. Economía UNAM, 69-91. https://www.scielo.org.mx/scielo.php?pid=s1665-952x2009000200004&script=sci_arttext
Liao, S. W. (2016). Decision sobre el precio del petroleo crudo bajo consideracion de emergencia y liberacion de reservas estrategicas de petroleo. https://www.sciencedirect.com/science/article/abs/pii/S036054421630086X?via%3Dihub
Liu, Y., Dilanchiev, A., Xu, K., & Merdan, A. (2022). Financing SMEs and business development as new post Covid-19 economic recovery determinants. Economic Analysis and Policy, 554-567. https://doi.org/10.1016/j.eap.2022.09.006.
Minola , T., Cassia , L., & Criaco , G. (2013). Financing patterns in new technology based firms have information investors do not have. 19 (2) 212-233. https://doi.org/10.1504/IJESB.2013.054964
Minsky, H. P. (1977). Banking and a fragile financial environment. The Journal of Portfolio Management, 3(4), 16-22. https://doi.org/10.3905/jpm.1977.408609.
Mirza, N., Afzal, A., Umar, M., & Skare, M. (2023). The impact of green lending on banking performance: Evidence from SME credit portfolios in the BRIC. Economic Analysis and Policy, 77, 843-850. https://doi. org/10.1016/j.eap.2022.12.024.
Nawazish Mirza, A. A. (2023). The impact of green lending on banking performance: Evidence from SME credit portfolios in the BRIC. Economic Analysis and Policy, 77, 843-850. https://doi.org/10.1016/j.eap.2022.12.024
Proaño‐Rivera, B. &.‐D. (2024). ¿Son los bancos ecuatorianos lo suficientemente eficientes técnicamente para el crecimiento? Un estudio clínico. International Journal of Finance & Economics, 29(2), 2011-2029. https://doi.org/10.1002/ijfe.2775
Radicic, D., & Petković, S. (2023). Impact of digitalization on technological innovations in small and medium sized enterprises (SMEs). Technological Forecasting and Social Change, 191, 1-16. https://doi.org/10.1016/jtechfore.2023.122474.
Tugsal, O. (2023). Does Islamic banking reduce the risks of COVID-19 for SMEs? Novel evidence for SME financing in the pandemic period for an emerging market. International Journal of Disaster Risk Reduction, 1-19. https://doi.org/10.1016/j.ijdrr.2023.103664
Wang, F. Y. (2019). Analisis de carcteristicas multifractatales de la fluctuacion de los precios de futuros de petroleo crudo en China. http://dx.doi.org/10.1016/j.physa.2019.122021.
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Dec 11, 2024
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Urdaneta-Montiel, A. J., Melean-Romero, R. A., & Prieto-Pulido, R. A. (2024). Evolution of Financing for smes in Ecuador: A Study in the Province El Oro. Desarrollo Gerencial, 16(2), 1–24. https://doi.org/10.17081/dege.16.2.7144
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