Turkish Banks at the Forefront of MSME Lending, but Gaps Remain

In Turkey almost all businesses are micro, small or medium-sized enterprises (MSME), and only 0.1 percent of businesses are large firms, according to the Turkey Agency for Statistics.
MSME lending constitutes a significant share of banks’ lending – it was 26% of the total banks’ portfolio in 2013, including 7% extended to microenterprises, despite the naturally much smaller average loan amounts, according to the data of the Turkish Central Bank. 
Last summer Stefan Staschen and I conducted background research in Turkey to inform The World Bank’s work on a forthcoming Financial Inclusion Landscape report about the state of financial inclusion in Turkey. We found there are several barriers preventing Turkish banks from increasing their lending to microenterprises, despite an interest in reaching further down market.