5 Many questions in the MENA survey were directly drawn from the two previous surveys, allowing for comparisons of some of the main results. At the same time, the MENA survey has new questions, designed to cover topics that were not covered in the previous surveys, but that are important for MENA, or designed to provide granularity on some of the obstacles to SME lending. For example, the MENA survey has included a new question on long-run targets for SME lending that allows us to assess the additional room for SME finance by each country. The survey also provides more granularity on some of the problems with financial infrastructure such as creditor rights (an area where the MENA region fares very poorly), asks questions on gender and Islamic finance, and finally includes some questions on the status of Basel II implementation, because of its potential effects on SME finance.

The first version of the MENA survey was tested in a pilot set of interviews with 6 banks in 2 countries – Morocco and Egypt. The results of these interviews provided important insights for the final revisions. The UAB and World Bank teams finalized the revisions and launched the survey in December 2009. The survey was sent in English, French, and Arabic. The UAB also played a fundamental role in the follow-up phase (January-May 2010), through constant communication with member banks, collecting responses, checking for inconsistencies, and frequently requesting revisions. The final response rate was high – slightly less than half of the universe, due largely to the active follow-up of UAB staff in headquarters and regional offices.

Table 1 reports the number of banks and countries from MENA that responded to our survey along with their market share. We obtained responses from a total of 139 banks in 16 countries. On average the banks that responded account for 64% of the banking system loans. Among the 16 countries in our sample, 6 are from the GCC and remaining 10 are from outside the GCC. The 57 GCC banks account for 74% of loans in GCC banking systems, while the 82 non-GCC banks account for 58% of non-GCC banking system loans. The sample includes 29 state banks and 110 private banks. Out of the private banks, 76 are domestic banks and 34 are foreign banks. However, foreign banks are usually subsidiaries of a parent bank domiciled in a MENA country. There are very few subsidiaries of international banks domiciled outside the region. This implies that it is difficult to assess differences in the behavior of foreign and domestic banks, as most foreign banks in the sample are part of a MENA regional group that shares the same strategies and lending technologies among its subsidiaries. Therefore, in the paper we explore more the differences between GCC and non-GCC banks, as well as the differences between state and private banks, rather than the differences between foreign and domestic banks.

The survey does not ask the banks to use a predetermined classification of SMEs, because this would have generated technical difficulties and could have resulted in a very low response. In line with other surveys, banks were asked to provide their own definitions for SMEs, in terms of employees and turnover. As shown in Table 2, the average minimum number of employees defining a small firm is 3 in the GCC and 4 in the non-GCC countries. The average maximum number of employees defining a small firm in the GCC and non-GCC is 24 and 17 employees respectively, while the average maximum number of employees defining a medium firm is 90 for the GCC and 58 for the non-GCC countries. These average thresholds adopted by the banks are much smaller than those adopted in the EU.