Assessment of Lebanese SME Troubles- Barriers to Banking Loan: Indebtedness Study for Lebanese SMEs

(Pages 2392-2403)

Majida Jrad*
Université de Lorraine, France.


This paper investigates the determinants of banks' contribution to financing Lebanese SMEs using data from 2013 and 2019, pooled in a combined panel. The study focuses on factors such as firm size, bank account possession, informal competition, interest rate, location in capital city, external audit, female top manager, years without formal registration, collateral requirements, and the duration of SME-Bank relationships. The empirical analysis reveals that firms' size and the length of relationship duration affect loan approval, with larger firms less likely to have loans. Banks prefer to build long-term credit relationships with customers, but only one SME characteristic, having a checking or savings bank account, has a negative significant effect on loan rejection. Another regression test tested the proportion of investments financed by banks, focusing on the economic sector, location of firms in capital city, interest rate, proportion of working capital financed by banks, SME's size, and duration of the relationship. Results show that firms using banks to finance their working capital (WCF) attract the most funds (BD). High interest rates can make loans expensive and unaffordable, leading to a decline in bank-financed investment. The consistency of the results between panels with grouped data and those with a binary variable to control for the year reflects the rigor of the Lebanese banking sector, but the difference in intensity could be attributed to macroeconomic conjunctures.


Access financing; barriers; bank loan; SMEs; regression analysis, indebtedness.

JEL Classification:

JEL Classification : C58, E51, G21, G32.

How to Cite:

Majida Jrad. Assessment of Lebanese SME Troubles- Barriers to Banking Loan: Indebtedness Study for Lebanese SMEs. [ref]: vol.21.2023. available at:

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