Uruguayan MSMEs : Determinants of Financial Access and its Impact on Performance Enhancing Activities

Latin American MSMEs differ with respect to their OECD counterparts with respect to the productivity gap between MSMEs and large firms – which is higher in Latin American countries –, as well as to the level of integration in value chains – which is lower – and their informality degree – which is higher (Llisterri & García-Alba, 2008). All three dimensions point towards the need of addressing the necessity of Latin American MSMEs of becoming more integrated into the formal grid of the economy. There is also a clear need of being better able to network with both public and private organizations, so as to improve their access to finance and information. Among Uruguayan MSMEs, around 20% are informal and only 25% are integrated in higher value chains or coordinate their activities with other firms. In this paper we study whether Uruguayan MSMEs' growth and productivity enhancing activities could be fostered through an adequate regulatory framework and the generation of new channels of accessing financing resources.The objective of our research will be hence threefold. First, we will start by describing the main characteristics of Uruguayan MSMEs. Secondly, we will analyze the determinants of MSMEs' access to finance. After this, we will construct an index of productivity enhancing activities and study its relation with formality, the firm's degree of bancarization, entrepreneurship and the firm's use of information, amongst other factors