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Countries in the MENAP and CCA regions have the lowest levels of financial inclusion of small and medium enterprises (SMEs) in the world. The paper provides empirical evidence on the drivers of SME access to finance for a large sample of countries, and identifies key policy priorities for these two regions: economic and institutional stability, competition, public sector size and government effectiveness, credit information infrastructure (e.g., credit registries), the business environment (e.g., legal frameworks for contract enforcement), and financial supervisory and regulatory capacity. The analysis also shows that improving credit information, economic competition, the business environment along with economic development and better governance would help close the SME financial inclusion gap between MENAP and CCA regions and the best performers. The paper concludes on the need to adopt holistic policy strategies that take into account the full range of macro and institutional requirements and reforms, and prioritize these reforms in accordance with each country’s specific characteristics.

Corporate Finance --- Finance: General --- Money and Monetary Policy --- Industries: Financial Services --- Consumer Economics: Empirical Analysis --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- Corporate Finance and Governance: General --- Financial Markets and the Macroeconomy --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Financial Institutions and Services: Government Policy and Regulation --- Financial Institutions and Services: General --- Ownership & organization of enterprises --- Finance --- Monetary economics --- Small and medium enterprises --- Financial inclusion --- Credit --- Bank credit --- Financial services --- Economic sectors --- Financial markets --- Money --- Business environment --- Small business --- Financial services industry --- Business enterprises --- Afghanistan, Islamic Republic of