The analysis shows that SMEs would enjoy greater access to finance when there is:

- Greater macroeconomic stability, which is associated with stronger private sector confidence and increased demand and supply of credit, including to SMEs

- Stronger banking sector soundness and resilience, as weak bank asset quality appears to hamper SME financial inclusion

- Lower public sector size, given the risk that a large public sector may crowd out credit to SMEs or create an uneven playing field for SMEs, exposing them to unfair competition

- Greater economic competition more broadly, since the concentration of economic activity in the public sector or in a limited number of large firms is likely to result in barriers to entry and lower SME productivity

- Better availability of quality credit information, which is an essential ingredient of the management of SME credit risk exposures

- Stronger legal and institutional frameworks related to property rights, contract enforcement, and collateral and insolvency regimes, which are all key conditions for banks to offer loans with reasonable terms and conditions