Banks and Credit Available to SMEs in UK (Dissertation Sample)

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Banks and Credit Available to SMEs in UK: A Case Study of HSBC
Author’s Name
Institution’s Name
Abstract
The main mantra of this thesis is to investigate the capital accumulation and credit rationing towards the Small and Medium Enterprises (SMEs) of the United Kingdom (UK), with a major emphasizing on the stance of HSBC in terms of providing credit. From this entire analysis, it is found that the essence of credit rationing and providence to the SME sector is extremely essential for an economy, as it is one of those sectors of an economy which has a direct linkage with the financial and strategic expansion of this sector, and it is also found from the entire analysis which has been conducted from the Business Specialist of HSBC is that HSBC is one of those investment banks which are high inclination towards providing credit to the SME sector of the UK to make this particular sector eminent than other.
Chapter-1, describes the core introduction of the SME sector and the importance of credit for them here in the United Kingdom (UK) region, along with background of the study and aims & objectives initiated for the same project.
Chapter-2, describes the core literature review of the analysis, in which leadership and its theories have been defined along with describing the importance SME sector for the region of the UK. Different theories and models of SME’s credit have been discussed in this particular analysis
Chapter-3 is the methodology of the research, in which we selected secondary research method, which also known as qualitative research method, in which interview has been conducted from the Business Specialist of HSBC through 10 different questions.
Chapter-4 is the analysis chapter, in which we use interview section to analyse the result. There are ten different questions which have been considered for the same analysis.
Chapter-5 is the conclusion of the thesis in which a summary is defined of the entire discussion. Apart from the conclusion, recommendations have also been defined accordingly.
Contents TOC \o "1-3" \h \z \u Abstract PAGEREF _Toc398138876 \h 3Chapter - 1 PAGEREF _Toc398138877 \h 6Introduction PAGEREF _Toc398138878 \h 6Background of the Study: PAGEREF _Toc398138879 \h 7Aims and Objectives: PAGEREF _Toc398138880 \h 8Research Questions: PAGEREF _Toc398138881 \h 9Research Problem: PAGEREF _Toc398138882 \h 9Research Purpose: PAGEREF _Toc398138883 \h 10Scope of the Research: PAGEREF _Toc398138884 \h 10The structure of the dissertation is mentioned below: PAGEREF _Toc398138885 \h 10Chapter-2 PAGEREF _Toc398138886 \h 12Literature Review PAGEREF _Toc398138887 \h 12Credit Rationing and Intermediation for SMEs in UK PAGEREF _Toc398138888 \h 13Changes in Finance Gaps in Recent Years PAGEREF _Toc398138889 \h 17Sources of Finance for SMEs PAGEREF _Toc398138890 \h 19Owner’s Own Capital PAGEREF _Toc398138891 \h 20Granting Loans from Banks PAGEREF _Toc398138892 \h 20Angel Investors PAGEREF _Toc398138893 \h 20HSBC and Credit Availability to SMEs PAGEREF _Toc398138894 \h 20Advantages of Credit Availability to SMEs in UK PAGEREF _Toc398138895 \h 21Enhancement in the Employability of the UK region PAGEREF _Toc398138896 \h 21Enhancement in Gross Domestic Product in UK PAGEREF _Toc398138897 \h 21Recovery from Economics Crisis PAGEREF _Toc398138898 \h 21Enhancement in Technological Efficiency PAGEREF _Toc398138899 \h 22Chapter-3 PAGEREF _Toc398138900 \h 23Research Methodology PAGEREF _Toc398138901 \h 23Research Objective PAGEREF _Toc398138902 \h 23Research Question PAGEREF _Toc398138903 \h 23Research Based Approach: PAGEREF _Toc398138904 \h 24Why this Approach is used: PAGEREF _Toc398138905 \h 26Advantages and Disadvantages of using Interview Question PAGEREF _Toc398138906 \h 26What type of Interview Question PAGEREF _Toc398138907 \h 26Advantages and Disadvantages of Secondary Research PAGEREF _Toc398138908 \h 27Target Population: PAGEREF _Toc398138909 \h 27Research Hypothesis PAGEREF _Toc398138910 \h 28Data Collection Technique : PAGEREF _Toc398138911 \h 28Sampling: PAGEREF _Toc398138912 \h 28Method to be used PAGEREF _Toc398138913 \h 28Summary of Methodology: PAGEREF _Toc398138914 \h 29Chapter-4 PAGEREF _Toc398138915 \h 30Analysis & Findings PAGEREF _Toc398138916 \h 30Question-1 PAGEREF _Toc398138917 \h 31Question-2 PAGEREF _Toc398138918 \h 32Question-3 PAGEREF _Toc398138919 \h 33Question-4 PAGEREF _Toc398138920 \h 34Question-5 PAGEREF _Toc398138921 \h 36Question-6 PAGEREF _Toc398138922 \h 38Question-7) PAGEREF _Toc398138923 \h 40Question-8 PAGEREF _Toc398138924 \h 42Question-9 PAGEREF _Toc398138925 \h 44Question-10 PAGEREF _Toc398138926 \h 45Chapter-5 PAGEREF _Toc398138927 \h 46Conclusion & Recommendations PAGEREF _Toc398138928 \h 46Recommendations PAGEREF _Toc398138929 \h 47Reference List PAGEREF _Toc398138930 \h 48
Chapter - 1
Introduction
The current era has been referred as the era of industrialisation in which big organisations as well as small and medium enterprises (SMEs) are having a great time, however there are points related to competition as well. These concepts have described by different authors like (Beltrame, Cappelletto and Toniolo, (2014), like the economies of different parts of the world are now increasing at a robust pace and this recent increment has been an evidence of prosperity in a greater context. Small and Medium Enterprises (SMEs) are some of the essential organisations which have a direct impact over the financial and strategic position of an organisation in particular.
Predominantly, for the European countries, the core contribution of the SME sector in terms of providing job opportunities is extremely important for their existence and enhancement. As per the estimation, SMEs account for about three quarters of total employment in the manufacturing in the region of Europe (Intarakumnerd and Lecler, 2010). Small and Medium Enterprises (SMEs) play a major and vital role in the economic development in almost every country of the world, including the European countries. As per critical reading, it is found that SMEs contributes on average around 60-70% of total formal employment in the manufacturing sector (Intarakumnerd and Lecler, 2010).
One of the crucial elements that come under the development and domain of SMEs development and execution is their access to finance; mainly for the bank financing that gives a relative importance to the banking sector in serving this particular segment. Not only for SMEs, the excess is to the relative level of finance which is one of the most important issues for corporate organisations in all over the world, as evident by the World Bank in their final report (Intarakumnerd and Lecler, 2010). However, the problems and obstacles of finance are more towards SMEs than that of large organisations and it is mentioned in different studies. For example, during the current economic crisis, most of the SMEs are unable to get finance from the banks in the same extent in which it is found by large organisations. It is also found that the problem of access to financing is more dominating in the developing countries of the world as unlikely to the developed countries like the United States (US), United Kingdom (UK) and others, in which SMEs sector is growing tremendously well and contributing effectively in the Gross Domestic Product (GDP) of the country (Lim, 2010).
During an era when safeguarding is a discriminating minute, the banks may be additionally eager to acknowledge the credit hazard. Furthermore, SMEs have a tendency to be mistier than substantial organisations on the grounds that they have a lower reporting prerequisites, there is a formal reporting structure obliges less and less subject to outside oversight by value speculators. This raises some imperative data issues (MacKenzie et al., 2011).
There are very few researches which have been conducted in the same context, however the importance of this topic is essential as banks and SMEs are now increasing in all over the world with a positive node and effectiveness. First and foremost, loaning to SMEs is by and large high hazard; in light of the fact that they have a tendency to be youthful organisations, they have a tendency to have less accessible guarantee security and they are more hostile to have evaluating power in their item showcases (MacKenzie et al., 2011). The main theme of this assignment is to analyse the level of structure of banks and its underlying effects over the lending stance of the banks. This particular aspect will look over different SMEs and their capital structure and then analyses the position of the companies. The researcher would like to assess the influence and implication of bank structure on the small business and small organisations, especially known as SMEs in the United Kingdom, with an especial emphasise on the HSBC bank (MacKenzie et al., 2011)
Background of the Study:
According to (Resti and Ayadi, 2009), the role of banks and financial institutions is extremely important and significant from the viewpoint of an economy. The role of banks in any economy is best seen in the context of the institutional mechanism to overcome on the information based difficulties. Nonetheless, the existing studies revealed that contrary to the conventional perception, hence financial institutions are not even interested in dealing with SMEs and small organisations (Staveren and Knorringa, 2009). This particular aspect involves flawed sustainability in the middle of bank and business sector money for SMEs and intimates that accessibility of account from banks fundamentally may influence genuine choices for SMEs, for example, speculation. Any level of estimating or restraining infrastructure control over SMEs intimates that issues in the keeping money framework will have a more prominent effect on SMEs loaning because of the absence of option sou...