Trade Finance Gaps And SME Export Capacity In Developing Economies: A Study Of Policy Interventions

Small and Medium Enterprises (SMEs) are vital to the economic growth of emerging economies,

particularly through their contributions to exports, employment, and innovation. However, their limited

ability to fully utilize trade finance hinders their participation in global trade. This text explores how

insufficient trade finance affects the export capabilities of SMEs in developing nations and proposes policy

solutions. By drawing exclusively on empirical and theoretical insights from existing literature, the study

identifies structural challenges such as restricted access to bank credit (Abora et al., 2014), inadequate

financial infrastructure (Auboin, 2015), and information asymmetries (Leonidou, 2004) as primary

obstacles. It further examines recent strategies, including digital finance innovations (Kumar et al., 2023),

financial literacy programs (Okello Candiya Bongomin et al., 2017), and regional integration strategies

(Aldaba, 2013), as effective policy responses to bridge financing gaps. The analysis highlights that for SMEs

to improve their export performance, governments should support them through institutional backing,

financial assistance, and skill enhancement. Overall, the study demonstrates how targeted programs and

actions can alleviate financial constraints, enabling SMEs in developing countries to reach their full export

potential.