The financing of small firms: different continents, the same problems?

The importance of small firms for economic development has been recognised across the globe. Most governments are aware that smaller enterprises face problems not experienced by their larger counterparts, and have taken steps to provide financial assistance. This article compares the experiences of small firms in the United Kingdom and Malaysia, and assesses whether public and private sector financial initiatives in the two countries have reduced the existence of the “finance gap” thought to prevail in both countries. The research programme conducted for this article suggests that, despite differences in the financial infrastructures, the cultural backgrounds and stages of economic development, small firms in the UK and Malaysia seem to adopt the same financing practices and face the same difficulties in raising funds. The reasons for this phenomenon are explored and the implications for policy-makers are discussed.