Access to Credit and Limits to Growth in SMEs: A System Dynamics Approach

Abstract

Access to credit has been considered as one of the main problems that SMEs have to deal with in order to survive and keep growing. This document describes a system dynamics model based on the case of a medium sized manufacturing firm located in Colombia. The model integrates operational and financial aspects of the firm, including variables associated with trade credit and bank’s credit. A sensitivity analysis is made in order to find high leverage variables. The results obtained indicate that operational and financial policies, when applied alone, are not sufficient to solve the firm’s stagnation problem. An appropriate combination of access to credit, credit conditions, and adequate operational and financial policies, might be the best way to deal with the complex problem of SMEs survival and growing.