Challenges Facing Micro, Small and Medium-Sized Enterprises (MSMEs) When Raising Capital in the West Bank of Palestine

Research Aim: The aim of this thesis is to investigate the factors that impact the accessibility of funds for Micro, Small and Medium-sized Enterprises (MSMEs) in the West Bank of Palestine. The study seeks to examine the relationship between these factors and MSMEs’ accessibility to funds and their performance. Additionally, the thesis explores the impact of financial institutions’ terms and conditions on MSMEs.

Research Gap: There is a gap in the literature regarding the challenges faced by MSMEs accessing funding in the West Bank of Palestine. Most studies have focused on the overall economic and political situation in the region, rather than specifically addressing the barriers to funding access for MSMEs. Therefore, this study aims to fill this gap by providing practical solutions to improve MSMEs’ access to funding.

Research methodology: The study adopts a mixed-methods approach and employs both qualitative and quantitative research methods to achieve the research objectives. The research involved semi-structured interviews with six key officials in the ministry of government, four agencies (credit guarantors), and fourteen microfinance institutions and banks (including commercial and Islamic banks). Additionally, a survey was conducted among 207 respondents of MSMEs in the West Bank of Palestine to gather quantitative data.

Research findings: The study identified several factors that impact the accessibility of funds for MSMEs in the West Bank of Palestine. These factors include corruption, lack of support from the government, complicated lending procedures, financial illiteracy, lack of crowdfunding infrastructure, and funds. The study found that MSMEs face challenges in preparing financial statements and other documentation required to access funding. The study also found that the lack of professional networking, experience sharing, and skills related to financial literacy hinder MSMEs’ learning as entrepreneurs.

Research contribution: The main contribution of this research is its individual discussion of the elements of a context-specific model in line with its exploration of issues related to access to finance for MSMEs in the West Bank of Palestine. The study provides practical recommendations for MSMEs, financial institutions, and governments to collaborate and coordinate to improve MSME performance and accessibility of funding. The study develops a theoretical framework based on institutional theory, critically analyses and evaluates it, and makes practical recommendations based on its findings.

Research implications: The findings of the study have practical implications for stakeholders, such as financial institutions and governments, to improve MSMEs’ access to funding and performance. The study recommends that financial institutions organise seminars and training programmes to help MSMEs develop professional networking, experience sharing, and skills related to financial literacy. The study also recommends that the government decreases the burden of taxes and fees on newly established MSMEs, attract more international investors to establish more financial institutions, and establish a credit department in banks to help MSMEs prepare their financial documents.

Research limitations: The study utilised a cross-sectional time horizon approach, which limits the generalisability of the results. The study also conducted semi-structured interviews, which are subjective in nature and may have biased responses. Additionally, the study used non-probability sampling techniques and data collected from a geographically and industrially specific sample, which may limit the generalisability of the findings. Future studies can utilise quantitative data and collect data from multiple time horizons and multiple stakeholders to improve the generalisability of the results.