How Firms Finance Investment — Bank Credit for Business Growth Across 121 Economies
Firms need capital to grow — new machinery, expanded facilities, research and development, technology upgrades. Where does that money come from? In developed financial systems, bank loans are a primary source. But in many parts of the world, businesses rely on retained earnings, informal lenders, or family networks because bank credit simply is not available or affordable.
This article explores the World Bank Enterprise Surveys data on the share of firms using bank financing to fund investment — a metric that reveals a great deal about the depth and reach of a country’s financial system.
For the big picture on how much credit flows to the private sector overall, see our blog post on global private sector credit rankings.
The Global Landscape
Across 121 economies with available data, the share of firms using banks to finance investment ranges from 83.2% in Israel to just 0.9% in Iraq. The global median is 27% — meaning that in a typical country, more than seven in ten firms finance investment without any bank involvement.
| Metric | Value |
|---|---|
| Countries with data | 121 |
| Global median | 27% of firms |
| Global mean | 27.3% of firms |
| Highest | 83.2% (Israel, 2024) |
| Lowest | 0.9% (Iraq, 2022) |
Where Banks Fuel Investment
| Rank | Country | Firms Using Bank Loans for Investment | Year |
|---|---|---|---|
| 1 | Israel | 83.2% | 2024 |
| 2 | Kosovo | 65% | 2025 |
| 3 | Saudi Arabia | 57.1% | 2025 |
| 4 | Central African Republic | 56.5% | 2023 |
| 5 | India | 56.1% | 2022 |
| 6 | Peru | 54% | 2023 |
| 7 | Uganda | 52.2% | 2025 |
| 8 | Italy | 48.8% | 2024 |
| 9 | Malawi | 47.7% | 2025 |
| 10 | Belgium | 47.7% | 2024 |
| 11 | Poland | 46.8% | 2025 |
| 12 | Morocco | 46.5% | 2023 |
| 13 | South Korea | 46.4% | 2024 |
| 14 | Armenia | 45.2% | 2024 |
| 15 | Slovakia | 43.7% | 2023 |
| 16 | Kenya | 42.1% | 2025 |
| 17 | Spain | 40% | 2024 |
| 18 | Austria | 39.7% | 2025 |
| 19 | China | 39.5% | 2023 |
| 20 | Türkiye | 39.4% | 2024 |
Israel’s 83.2% is exceptional — more than four in five firms use bank credit for capital expenditure, a figure matched nowhere else in the dataset. This reflects a highly developed banking sector with strong relationships to the country’s technology and export-oriented business sector.
India’s 56.1% is the highest among the world’s most populous economies. Despite a large informal sector, a significant share of registered firms access bank credit for investment. For context on how Indian firms compare on broader working capital finance, see our blog on how the world finances business.
Italy (48.8%) and Spain (40%) are the top-ranked large European economies — consistent with the bank-dominated financial systems of southern Europe, where capital markets play a smaller role than in the United States or the United Kingdom.
Where Investment Financing Is Rarest
| Rank | Country | Firms Using Bank Loans for Investment | Year |
|---|---|---|---|
| 107 | Cambodia | 9.4% | 2023 |
| 108 | Guinea | 9% | 2025 |
| 109 | Egypt | 8.9% | 2025 |
| 110 | Republic of the Congo | 8.7% | 2024 |
| 111 | Mali | 7.7% | 2024 |
| 112 | DR Congo | 7.6% | 2024 |
| 113 | Pakistan | 5.5% | 2022 |
| 114 | Nigeria | 5.2% | 2025 |
| 115 | Liberia | 4.6% | 2025 |
| 116 | Angola | 4.5% | 2024 |
| 117 | Madagascar | 4.1% | 2022 |
| 118 | Trinidad and Tobago | 3.1% | 2025 |
| 119 | Afghanistan | 2.7% | 2025 |
| 120 | Palestine | 1.4% | 2023 |
| 121 | Iraq | 0.9% | 2022 |
The list is dominated by fragile and conflict-affected states (Iraq, Afghanistan, Palestine), countries with shallow banking systems (Nigeria, Angola), and economies where high lending rates choke demand for credit.
Nigeria’s 5.2% is particularly striking given its size. Africa’s largest economy and most populous nation has one of the lowest rates of bank-financed investment in the world. This is consistent with our earlier finding that Nigeria also ranks among the bottom in private sector credit at just 9.6% of GDP. For comparison on where Nigerian firms get working capital, see our article on where firms rely on bank loans.
What Drives These Differences?
Several structural factors explain why firms in some countries rely heavily on bank credit for investment while others do not.
Financial depth matters. Countries where private sector credit exceeds 100% of GDP — like China, South Korea, or Chile — tend to have higher rates of bank-financed investment. But the relationship is not perfect. Israel tops the investment-financing ranking despite having a private sector credit ratio of 87.5% of GDP — well below the top 25.
Lending rates suppress demand. Where borrowing costs are high, fewer firms find bank loans economical. Our analysis of the cost of credit shows that countries with lending rates above 20% — such as Nigeria and Angola — see very low uptake of bank financing for investment. For the most expensive places to borrow, see our article on the most expensive places to borrow.
The size of the formal economy matters. Enterprise Surveys cover registered firms with at least five employees. Countries with large informal sectors — where most businesses operate outside the tax and regulatory system — automatically report lower rates of bank-financed investment because many firms are simply invisible to the banking system.
Collateral requirements are a barrier. In many developing countries, banks require physical collateral worth 100–200% of the loan value. When firms lack registered land or property titles, they are effectively locked out of the credit market.
Bank Credit vs. Other Sources
Even in countries where bank financing is common, firms use a mix of sources for investment. Internal funds or retained earnings are nearly universal. Trade credit from suppliers plays a role in manufacturing. In countries with developed capital markets — particularly the United States and Japan — equity and bond issuance are alternatives for larger firms.
For small and medium enterprises (SMEs), however, bank credit is often the only external option. The scarcity of SME financing in low-credit economies helps explain why small business growth lags even when the macroeconomy is expanding.
Why It Matters
The rate of bank-financed investment correlates with broader economic outcomes. Firms that cannot access credit for investment grow more slowly, hire fewer workers, and are less likely to adopt new technology. Over time, these gaps compound — economies with low business investment financing tend to see lower productivity growth and slower structural transformation.
For policymakers in low-ranked countries, improving access to investment finance is not just a financial sector goal — it is a development priority. For more on the interaction between banking infrastructure and financial inclusion, see our explainer on where banking still means walking in.
Sources & Method
The primary data source is the World Bank’s Enterprise Surveys, aggregated under WDI indicator IC.FRM.BNKS.ZS — the percentage of firms that report using banks to finance investments (fixed assets). This includes loans, lines of credit, and overdrafts used to purchase machinery, equipment, vehicles, buildings, or land.
Enterprise Surveys use a standardised methodology across countries, making cross-country comparisons valid. However, survey years vary — some observations are from 2022, others from 2023–2025. Data availability varies by economy; 121 economies have usable data.
Data year is the survey year, not the calendar year of the publication. Where surveys span two years (e.g., 2024–2025), the most recent year is displayed.
See our methodology page for full details on data sourcing, processing, and limitations.
For more on this topic, see our related content on how the world finances business, capital and business finance, and our ranking of global private sector credit.