Globally, banks are renowned to be engines of economic growth. They mobilise funds from areas of surplus to areas of needs as well as give interest to the depositors and charge interest from the borrowers, thereby providing income for those who have idle funds, and earning income from those that borrow money to finance their businesses.
By so doing, capital gaps that may exist for companies undertaking important transitions in their activities are eliminated.
The long-standing need to strengthen capital structures and to decrease dependence on borrowing has become more urgent, as many firms are obliged to increase leverage in order to survive the recent economic and financial crisis. Indeed, the problem of small and medium enterprises (SMEs) over-leveraging may have been exacerbated by policy responses to the crisis, which tended to focus on mechanisms that enabled firms to increase their debt (e.g. direct lending, loan guarantees).
Without a doubt the full potentials for ensuring…
Source: Leadership Newspaper
