Access to Finance for SMEs through the Stock Exchange in Egypt: Conceptual Framework and Policy Implications

Small and medium-sized enterprises (SMEs) play a crucial role in the Egyptian economy, in term of their contribution to the GDP and total employment. Yet, their contribution in capital formation is very limited, mainly because of the finance constraints they face. Consequently, to improve the SMEs access to finance, the creation of a junior exchange is a must. In this context, the CASE launched a new platform; the Nile Stock Exchange (Nilex) with new listing rules and regulations that focus on a cost-effective regulatory regime adapted to the needs and characteristics of SMEs. As a public policy, enhancing transparency and coordination in supportive public programs, such as programs to match private venture capital with public funding is an important tool to help SMEs to go public. As a result, creating a need to examine the institutional setting of the small firm initial public offerings (IPOs) market in order to identify the specific modifications to the regulatory requirements that should be performed.