Understanding the Dynamics of Financial Constraints and Business Viability among Bahrain’s SME Sector
Alya Alhaddad
Alya Alhaddad, Department of School of Economics, Shanghai University, Shanghai, China.
Manuscript received on 21 October 2024 | Revised Manuscript received on 02 November 2024 | Manuscript Accepted on 15 November 2024 | Manuscript published on 30 November 2024 | PP: 80-91 | Volume-4 Issue-2, November 2024 | Retrieval Number: 100.1/ijef.L1000013121124 | DOI: 10.54105/ijef.L1000.04021124
Open Access | Editorial and Publishing Policies | Cite | Zenodo | OJS | Indexing and Abstracting
© The Authors. Published by Lattice Science Publication (LSP). This is an open-access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: With a strategic role in realizing national ambition and strategy, Small and Medium Enterprises (SMEs) have been referred to as the backbone of Bahrain’s economy due to their drive forward in corporate innovation and investment, making them pivotal to the Kingdom’s 2030 Vision. However, SMEs face persistent financial constraints that hinder their ability to thrive in an increasingly competitive market. This study examines the dynamics that influence the financial viability of Bahrain’s SME sector, addressing the potential challenges that hinder access to essential funding sources and evaluating innovative solutions for overcoming these barriers beyond traditional financing methods. The research employs a mixed-method approach, incorporating qualitative and quantitative data to assess the extent of financial obstacles within Bahrain’s SME ecosystem. It analyzes various financing channels, including local bank funding, public initiatives, and alternative sources such as asset-based financing and crowdfunding. Findings reveal that while Bahrain’s banking sector plays a role in SME financing, stringent lending requirements and high collateral demands often prevent smaller enterprises from accessing these resources. Additionally, the study examines government policies and alternative financial instruments, providing recommendations to diversify and enhance access to financing through measures such as improving credit ratings, developing innovative regulatory frameworks, and implementing educational programs to increase financial literacy among SME owners. The findings of this research highlight the crucial need for customised financial solutions to support small and medium-sized enterprises (SMEs), positioning them as key drivers of competitiveness within Bahrain’s economy. By addressing these financial constraints, Bahrain can stimulate the growth of SMEs, ensuring the sector’s sustainability and resilience. This study aims to guide policy development that fosters a more inclusive financial ecosystem, empowering SMEs to contribute effectively to Bahrain’s economic transformation and long-term prosperity.
Keywords: SMEs (Small and Medium Enterprises), Financial Constraints, Business Viability, Bahrain, Capital Markets, SME Funding.
Scope of the Article: Finance