Banking Sector’s Role in SME Growth and Economic Development: A Comparative Study of Finland and Bangladesh

Abstract

This study looks at how financial institutions in Finland and Bangladesh support the growth of SMEs and the general economic development of both nations. In both rich and developing nations, SMEs have unique financial constraints despite playing a critical role in innovation, job creation, and long-term economic growth. This article examines the roles played by the banking industries in both nations, with a focus on financial products, online banking, laws, and financing programs for small and medium-sized businesses. The research employs a mixed-methods approach, combining survey data with policy analysis and an extensive review of existing literature. These methods were used to assess how banking institutions function within their respective national contexts and how they affect SME access to finance. The study evaluates the extent and effectiveness of banking support mechanisms through both qualitative and quantitative lenses. The findings demonstrate that Finland's banking sector is both technically advanced and inclusive, providing SMEs with strong institutional support and promoting business growth. Despite numerous positive advancements, Bangladesh's banking sector is beset by high interest rates, a lack of digital infrastructure, and insufficient law enforcement. The study concluded that three crucial components—digital innovation, readily accessible financial services, and regulatory strength—must work together to guarantee the success of SME development. Additionally, it provides policy suggestions to financial stakeholders on how the banking industry may promote long-term, fair economic growth.