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Financing small and medium-size enterprises with factoring global growth and its potential in Eastern Europe

Gregory F. Udell · Leora F. Klapper · Marie-Renée Bakker

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Working Capital and Financial Performance Banking stability, regulation, efficiency Microfinance and Financial Inclusion

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No AccessPolicy Research Working Papers25 Jun 2013Financing Small and Medium-Size Enterprises with Factoring: Global Growth and Its Potential in Eastern EuropeAuthors/Editors: Gregory F. Udell, Marie-Renée Bakker, Leora KlapperGregory F. Udell, Marie-Renée Bakker, Leora Klapperhttps://doi.org/10.1596/1813-9450-3342SectionsAboutPDF (0.7 MB) ToolsAdd to favoritesDownload CitationsTrack Citations ShareFacebookTwitterLinked In Abstract:Factoring is a form of asset-based finance where the credit is extended based on the value of the borrower's accounts receivable. In recent years factoring has experienced phenomenal growth and has become an important source of financing—especially short-term working capital—for small and medium-size enterprises and corporations, reaching a worldwide volume of 760 billion euro in 2003. Although the importance of factoring varies considerably around the world, it occurs in most countries and is growing especially quickly in many developing countries. Bakker, Klapper, and Udell explore the advantages of factoring over other types of lending for firms in developing economies, and discuss the informational, legal, tax, and regulatory barriers to its growth. They also examine the role of factoring in the eight Eastern European countries that became EU members on May 1, 2004—the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, the Slovak Republic, and Slovenia, referred to as the EU 8. The authors conclude that factoring offers key advantages over other lending products and is likely to become more important in these countries, and suggest policies to accelerate its development. This paper—a joint product of the Finance Team, Development Research Group and the Private and Financial Sector Development Department—is part of a larger effort in the Bank to study access to financing. Previous bookNext book FiguresReferencesRecommendedDetailsCited ByCash Collateral, Creditor Rights, and the Provision of Trade CreditSSRN Electronic Journal, Vol.68Determinants of Accounts Receivables Financing: India and Other Asian Economies PerspectivesThe Indian Economic Journal, Vol.67, No.1-210 September 2020Viability of pro-SME financing schemes: A developing country perspectiveCorporate Ownership and Control, Vol.12, No.21 January 2015State-Owned Banks from RomaniaSSRN Electronic Journal View Published: June 2004 Copyright & Permissions Related RegionsEurope and Central AsiaRelated CountriesCzech RepublicRelated TopicsLaw and DevelopmentMacroeconomics and Economic GrowthPrivate Sector DevelopmentFinance and Financial Sector Development KeywordsBANKCOLLECTIONSCONTRACT ENFORCEMENTCRED ECONOMIESENTERPRISESFACTORINGFINANCEFINANCIAL SYSTEMSGOVERNMENTSINDUSTRYINFRASTRUCTUREINSURANCELAWSLENDINGMARKETSRISKSERVICESVALUEWORKING CAPITAL PDF DownloadLoading ...