SMEs and Banks in Latin America and the Caribbean: Closing the Gap for Banks in the Region – Sixth Regional Survey

This paper tracks the banking trends, challenges, and opportunities for increasing SMEs' access to finance in Latin American and Caribbean regions. This edition takes a deep dive on segmentation between small and medium enterprises, and on general awareness of the innovative credit-scoring tool known as psychometric testing. Findings include:

• Survey indicates that banks foresee a continuation in the loan portfolio expansion in the SME segment. About 96% of banks surveyed share that they consider SMEs to be strategic to their business, and 92% of them have an active financing policy for these enterprises;
• In terms of contributing to the banks business, their reason for the involvement in this segment is due to the accelerated growth of SMEs (31%) and the increased profitability (21%);
• About 54% of the banks surveyed expressed belief in the betterment of the economic situation of the SMEs in the next two years;
• Around 27% of the banks surveyed expressed that their ability to serve the SMEs adequately is constrained due to the segment's informality;
• In parallel to banks' exercise of segmentation, increased dialogue between policy makers, regulators, banks, and SME business owners is needed. The same regulation for corporate lending may not be applicable to SME lending.