The Role of Private Banks In Financing Small and Medium Enterprises in Iraq


Small and Medium Enterprises (SMEs) constitute the backbone of an economy. They not only provide employment and, therefore income opportunities to a large number of people, but they are also at the forefront of technological innovation and export diversification. The banking sector - specifically commercial banks and specialized banks - have several ways to get involved in SMEs finance, ranging from the creation or participation in SMEs finance investment funds, to the creation of a special unit for financing SMEs within the bank.This paper aims to shed light on the experience of Iraqi commercial banks in financing SMEs and under policies of the transition from the planned economy to the economy based on the forces of supply and demand. The available data show that there are two channels through which the financing of SMEs by Iraq commercial banks, the first channel is through the Iraq company for bank guarantees, while the other channel is the Iraqi company for financing SMEs. Which reflected by increasing the volume of loans funded by commercial banks, the total gross loans are approximately 40 billion dinars, and is expected to double in one year based on current monthly growth.