Impact of Commercial Banks’ Lending to Small and Medium Scale Enterprises on Economic Growth of Nepal

Abstract

This paper reflects the allocation of small and medium scale enterprises loan by the commercial bank of Nepal and their subsequent reflection on the GDP growth. The study objectives were to establish how the SME lending of commercial bank is contributing toward the growth of the economy. There is strong and long term relationship between SME lending of commercial bank and economic growth. Banking system credit have no significant effect on economic growth of Nepal. The prevailing rate of interest affected the economy towards the negative growth. This paper is based on the secondary source of information briefly explain the potentiality of SME loan for the GDP growth of Nepal.