Small and Medium-Sized Enterprises and SME Exchanges

S. Cleary, S. Alderighi, J. Irving and J. Woodsome | World Federation of Exchanges, Milken Institute

Small and medium-sized enterprises (SMEs) play a vital role in generating economic growth in the world’s economies. Despite their economic importance, however, SMEs struggle with access to finance. While this is true in many countries—across advanced, emerging, and developing economies— it is particularly pronounced in economies with less developed financial sectors. In the past few decades, an increasing number of stock exchanges worldwide have set up specialized SME boards or market segments with the intention of expanding SMEs’ financial access (among other reasons). Many of these boards encourage listings by having different entry standards than the main board,4 streamlining the listing process and reducing the associated costs. Few studies have comprehensively examined the effectiveness of equity markets, and SME exchanges specifically, in meeting the financial and other listing motives of SMEs, especially from the perspective of SMEs themselves. The World Federation of Exchanges (WFE) and the Milken Institute Center for Financial Markets (CFM) both recently published new research findings examining how and why SMEs access stock exchanges, as well as the role of stock exchanges in financing SMEs.

Capital Markets, Access to Finance, SME Finance & Leasing, Stock Markets & Exchanges
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