Development and access to finance of small and medium-sized enterprises in Mongolia

This paper presents a recent survey on development and access to finance of small and medium-size enterprises (SMEs) in Mongolia. The survey covers a sample of 1922 SMEs from Ulaanbaatar (capital city) and 21 provinces. We find that banks and local government administration are the most supportive institution for SME development. Political instability, corruption and labour supply, high lending rate, short maturity loans, service fees are perceived as the major obstacles that SMEs face in their business environments. Our results also suggest that SMEs in Mongolia are less likely to have access to external finance because of tight credit condition, potentially explaining the lack of SMEs’ growth. Implementing country-specific reform strategy for SME development covering key building blocks is needed to promote SME financial inclusion and facilitate SMEs to contribute the economic growth.