Whilst studying the lending and the changing structure of the banking industry, Strahan and Weston (1998) find that SMEs get reduced of financing in the case large size banks forms merger or acquisition , whereas in the case forming merger or acquisition by small scale banks financing increases for the SMEs. They throw light on an occurrence which concerns to the fact that during the establishment of small scale banks merge diversification improved anti-risk capability of the banks subsequent to the merged and in this way they may well offer more financing to SMEs. However, with the added opening out of the banks’ size, they lean to financing to large size firms, consequently, the proportion of financing to SMEs tend to come down. On the other hand, authors have revealed based the findings of their study that big establishments are found to finance to bigger, grown-up SMEs with strapping financial proportions, and small establishments are revealed to be reliant more on soft information and financing to SMEs with which they have strapping associations relationships (Bergen et al, 2005). Given that SMEs play an ever more vital role, authors increasingly have started to examine financing to SMEs in the contexts of both developed and developing countries.
Cross-country studies conducted so far demonstrate that SMEs undeniably face large financing constrictions that obstruct the survival and growth of such firms. In this context, one of the most notable revelations is that asymmetric information stuck between the lender and the borrower of SMEs might impede financial institutions keenness to offer finance. This eventually would slow down the SMEs performance in terms of various growth indicators. In this context, Coluzzi, Ferrando and Martinez-Carrasca (2008) cited in Balling et al (2009), study the financing obstructions of five euro area countries (Germany, Spain, France, Italy and Portugal) making use of survey data gathered from SMEs made available by the World Bank. The findings of their study reveal that growing SMEs clearly grow up quicker than grown-up SMEs, however when it comes to financing challenge or accessibility of financing, the growing up SMEs have comparatively more financing constraints than the grown up. More specifically, as they reveal SMES the manufacturing and construction sectors are more probable to be hampered by non or restricted accessibility of which might be due to the far above the ground capital requirement for operation in these sectors