AGENCY RELATIONSHIP PROBLEMS AND LENDING TO SMALL BUSINESSES

The agency problems in the relationship between banks and small businesses in Malaysia can cause harmful under financing to the small business sector. The lack of information can also lead to excessive caution among bankers when assessing loan applications from small businesses. This is further exacerbated by a gap between bankers and small business owners, which is caused mainly by the lack of understanding among some bankers who often perceive small business owners as a potential portfolio of non performing loans, and are thus reluctant to help them. To address these problems, bankers need to focus more on understanding the commercial viability of small businesses, their cashflows, and work out procedures for channeling required funds to them. They can obtain valuable information through monitoring the operations of the small business borrowers. This helps in building up their knowledge of small businesses and the potential for viable funding.

KHAIRUL IDZWAN IDRIS

Timbalan Pengerusi
Biro Ekonomi Dan Pembangunan Usahawan
Pergerakan Pemuda Umno Bahagian Setiawangsa
Wilayah Persekutuan