R. Kumar

SMEs form a dominant share of the private sector in developing countries, and account for more than 50
percent of jobs in their respective economies. Besides their positive employment effects, the growth and
vibrancy of these firms is also important for broader economic growth, diversification of economic base
and as a source of innovation that is exhibited by some of the start-ups. Women-owned SMEs are
emerging as one of the fast growing segments within the SME sector. Youth play an important role in the
creation of new firms and start up activities. Given this importance of SMEs for creation of more, better
and inclusive jobs, there is significant focus on understanding the constraints to growth of this sector and
implementing programs to address them in the World Bank Group and the other development
institutions. Among the several constraints that they face, access to finance is usually cited as the most
important and there are several instruments that can be applied to address this constraint. However, what
is the evidence of impact of these programs on the employment effects? This note brings together the
learnings and evidence from access to finance interventions on employment and provides some
recommendations for development practitioners who seek to maximize this objective from their access
to finance interventions.