A new survey by the Bank Negara Malaysia discovered that SMEs (small and medium enterprises) saw faster growth and development when they were provided with financing assistance.
According to the New Straits Times, Bank Negara's study revealed that there was an apparent link between growth and financial support among SMEs in Malaysia. "The positive linkage between entrepreneurship and growth is well established, but a growing body of research focusing on the importance of finance in supporting SME development shows that firms with access to loans grow at a faster rate than those without such access," the bank noted.
Over the past years, the central bank has helped provide entrepreneurs with an inclusive and progressive finance sector that assists in funding for capital. The Bank Negara further stated that SMEs play a pivotal role in helping create new jobs in the country, which is why it's important that financial institutions will consider providing loans to eligible enterprises.
The study cited three main purposes that SMEs usually consider during loan application. These are funds for starting a new business, working capital, and assets. The last item includes property or building rental, and machinery or equipment that the business will use in operations.
Finally, the 2018 Annual Report from Bank Negara Malaysia suggested that most SMEs in Malaysia were able to secure business loans. In fact, these businesses with approved loans saw a 94 percent success rates. While financing was obtained from different institutions and some of them unsecured, the massive success rate could strengthen the link between SME growth and financing.
While the report pointed out many positive results in Malaysia's SME sector, it also suggested that women in the industry received lower approval rates. According to The Malaysian Reserve, while women-run enterprises had a higher demand for business loans, the approval rate only reached 83 percent. The study said reasons for rejection are mostly due to inadequate track records and insufficient paperwork.
In the bigger world, it was further revealed there is still a small number of women leaders in Malaysia's corporate realm. Earlier this month, international professional services network, Grant Thornton International Ltd.'s Women in Business Research indicated that only 17 percent of enterprises in the country have a female managing director or chief executive.
The study also revealed that most women, even if they had the potential to become administrative leaders in companies, had to leave their jobs due to responsibilities outside the work environment such as caring for their young kids.
In response to the call for more women to join higher ranks in the Malaysian corporate sector, the government has agreed to establish childcare centers where mothers can drop off their kids and pick them up after work.
