Factors Influencing The Process of Lending to Small and Medium-Sized Enterprises in The Tourism Sector

Abstract

Small and medium sized enterprises are key to economic development, job creation and the growth of the national tax base. The tourism sector is more sensitive to finance issues needing to obtain outside funding for the establishment, expansion and modernization of their enterprises. This is why bank lending is an important tool to stimulate entrepreneurship and promote tourism enterprises effectiveness and sustainability. While credit support matters a lot, existing lending systems often overlook features and risks of tourism businesses. Doing so creates knowledge gap in regard to the complex set of factors that impact lending decision of banks to small and medium sized enterprises using tourism as their business industry sector. The research is conducted using the methods of scientific abstraction, logical analysis, deduction, comparative analysis, system analysis, generalization and synthesis, that is, directed to the study of the factors that affect bank lending to tourism enterprise. Also, documentary-normative analysis method is applied to evaluate existing mechanism of financial and credit support. The determinants which influence lending processes are grouped by the authors according to their common features: there are bank strategy and lending policy, demand for credit resources, macroeconomic conditions and crisis phenomena, and financial soundness of borrowers. The analysis further reveals that tourism businesses also contend with the added difficulties of seasonality, market, and other economic factors. The findings show that an efficient credit support approach has to take into account a well-balanced lending industry lending both fairly and prudently to tourist enterprises for the example of credit nurture to address sector particular demands. That is focus on mechanisms of lending improvement, expansion of special financial programs, closer cooperation between financial institutions and businessmen to make access to financial resource more sufficient. These enhancements will promote sustainable development of the tourism sector and trigger wide spread economic growth.