This study investigates the effect of banking reform on Small and Medium Enterprise (henceforth SMEs) access to bank credit during post-liberalization period 1994 to 2007. Aiming at casting light on the changes in the country's banking sector, bank concentration, competition, efficiency, and liquidity have been assessed. In addition, survey of 102 randomly selected manufacturing SME has been conducted to examine changes in SME access to bank loan. Assessment of changes in the banking sector

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... als that the sector has become less concentrated. However, competition among banks is weak, which is manifested through operational inefficiency and accumulation of large stock of liquidity. This led to persistence of lack of access to bank loan even after the reform. The study also finds that access to loan is limited across firms of different age groups, ownership forms, and at different stages of SME development. In general, despite the introduction of banking sector reform in 1994 that led to expansion of the banking industry, SMEs' problem of credit access has persisted. This implies that changes in the banking sector structure per se are not sufficient to introduce competition in the banking industry and an improvement in SME credit access. Policy makers should therefore devise mechanisms that enhance competition in the banking sector and establish a policy framework that encourages them to lend to the SME sector.