The Role of Commercial Banks in Financing Small and Medium Enterprises (SMEs)

Ibrahim Ahmed Abdulhadi Khrais presented his research on "The Role of Commercial Banks in Financing Small and Medium Enterprises" at the Gate Academy celebration.

Introduction:
Today's economic landscape is undergoing unprecedented changes, marked by globalization, international and regional partnerships, and increased market liberalization. These changes have brought about radical transformations in the dynamic and uncertain environment, altering both macroeconomic factors and organizational strategies.

Strategic planning involves various mechanisms aimed at managing change to address internal challenges and external threats. The recent shifts in international economic relations have led to a reconsideration of the prevailing notion that large-scale enterprises drive the economy and ensure societal prosperity. Governments in advanced economies are increasingly focusing on the sector of small and medium enterprises (SMEs), recognizing its strategic role in contributing to economic and social growth. SMEs play a crucial part in increasing gross domestic product (GDP), reducing unemployment rates, and expanding into foreign markets, safeguarding the national economy from risks associated with becoming a market for surplus production from advanced countries.

The success achieved by the small and medium enterprise sector globally is not coincidental but rather a result of adopting comprehensive and integrated developmental strategies. Despite their strategic importance, SMEs face numerous challenges, particularly during their inception, hindering their growth, development, and sustainability. One significant obstacle is the financing problem, as many of these enterprises lack sufficient financial resources. Consequently, external funding sources, such as bank loans, become crucial for entrepreneurs to realize their projects.

With the increasing globalization of funding sources and heightened competition among financial institutions, commercial banks are actively seeking new clients to ensure their sustainability, continuity, and increased profitability amid these ongoing transformations (Abdelhakim, 2007).

Significance of the Study:
The importance of this study can be highlighted in two main aspects:

1. Scientific Significance:
   Various countries strive to achieve economic efficiency, ensuring high growth rates in national income and elevated employment levels under comprehensive economic policies. Encouraging and promoting small and medium enterprises is a key direction in economic policies due to their significant role in increasing gross domestic product (GDP) and contributing to economic development, especially in the face of challenges associated with market economies and increased global economic interdependence. The notable consequences of this interdependence make small and medium enterprises more susceptible to risks, emphasizing the need for strategic planning to confront new circumstances. Therefore, accelerating efforts and integrating them are essential for overcoming economic challenges by relying on small and medium enterprises as an economic development engine. Governments need to support and promote these competitive enterprises.

2. Practical Significance:
   The practical significance of the study lies in the results it may yield, providing recommendations and proposals for managers in the banking and business sectors. This guidance can help them use the most suitable leadership style in managing their employees to achieve their set goals.

Study Objectives:
The study aims to achieve the following objectives:

1. Provide a comprehensive overview of the concepts of commercial banks and small and medium enterprises.
2. Classify small and medium enterprises.
3. Identify the characteristics of small and medium enterprises.
4. Understand the importance of small and medium enterprises.
5. Recognize the significance of small and medium enterprises for banks.
6. Explore the financing methods employed by commercial banks for small and medium enterprises.

For more information about Gate Academy and details about its training programs, as well as how to participate in the upcoming event, please visit the following link
https://gatetrainingeg.com/ar/master_degree