Abstract
Small and medium-sized enterprises (SMEs) are the backbone of the Asian economy. They make up more than 96% of all Asian businesses, providing two out of three private-sector jobs on the continent. Therefore, it is vital for Asia’s economic success that fully functioning support measures for SMEs are in place. However, SMEs face major challenges in accessing cheap finance, mainly because of the asymmetric information problem between suppliers and users of funds and high transaction costs. These lead to more collateral requirements for lending to SMEs with higher lending interest rates, which hinder their growth. As most Asian countries are bank-dominant economies, capital market financing is not a realistic option for SMEs. Therefore, we need to look for solutions that simplify banks’ lending to SMEs. This chapter will highlight the difficulties faced by SMEs in accessing finance and provide measures for mitigating them. The remedies proposed in this chapter include the development of a credit information infrastructure for SMEs, the utilization of credit-rating techniques for SMEs to address the problem of asymmetric information, and the development of a sustainable credit guarantee scheme to resolve the collateral issue.
| Original language | English |
|---|---|
| Title of host publication | Unlocking SME Finance in Asia |
| Subtitle of host publication | Roles of Credit Rating and Credit Guarantee Schemes |
| Publisher | Taylor and Francis |
| Pages | 3-22 |
| Number of pages | 20 |
| ISBN (Electronic) | 9780429684579 |
| ISBN (Print) | 9781138353428 |
| DOIs | |
| Publication status | Published - 2019 Jan 1 |
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ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
- Business, Management and Accounting(all)
Cite this
Role of SMEs in Asia and the financing challenges they face. / Yoshino, Naoyuki; Taghi Zadeh Hesary, Farhad.
Unlocking SME Finance in Asia: Roles of Credit Rating and Credit Guarantee Schemes. Taylor and Francis, 2019. p. 3-22.Research output: Chapter in Book/Report/Conference proceeding › Chapter
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TY - CHAP
T1 - Role of SMEs in Asia and the financing challenges they face
AU - Yoshino, Naoyuki
AU - Taghi Zadeh Hesary, Farhad
PY - 2019/1/1
Y1 - 2019/1/1
N2 - Small and medium-sized enterprises (SMEs) are the backbone of the Asian economy. They make up more than 96% of all Asian businesses, providing two out of three private-sector jobs on the continent. Therefore, it is vital for Asia’s economic success that fully functioning support measures for SMEs are in place. However, SMEs face major challenges in accessing cheap finance, mainly because of the asymmetric information problem between suppliers and users of funds and high transaction costs. These lead to more collateral requirements for lending to SMEs with higher lending interest rates, which hinder their growth. As most Asian countries are bank-dominant economies, capital market financing is not a realistic option for SMEs. Therefore, we need to look for solutions that simplify banks’ lending to SMEs. This chapter will highlight the difficulties faced by SMEs in accessing finance and provide measures for mitigating them. The remedies proposed in this chapter include the development of a credit information infrastructure for SMEs, the utilization of credit-rating techniques for SMEs to address the problem of asymmetric information, and the development of a sustainable credit guarantee scheme to resolve the collateral issue.
AB - Small and medium-sized enterprises (SMEs) are the backbone of the Asian economy. They make up more than 96% of all Asian businesses, providing two out of three private-sector jobs on the continent. Therefore, it is vital for Asia’s economic success that fully functioning support measures for SMEs are in place. However, SMEs face major challenges in accessing cheap finance, mainly because of the asymmetric information problem between suppliers and users of funds and high transaction costs. These lead to more collateral requirements for lending to SMEs with higher lending interest rates, which hinder their growth. As most Asian countries are bank-dominant economies, capital market financing is not a realistic option for SMEs. Therefore, we need to look for solutions that simplify banks’ lending to SMEs. This chapter will highlight the difficulties faced by SMEs in accessing finance and provide measures for mitigating them. The remedies proposed in this chapter include the development of a credit information infrastructure for SMEs, the utilization of credit-rating techniques for SMEs to address the problem of asymmetric information, and the development of a sustainable credit guarantee scheme to resolve the collateral issue.
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U2 - 10.4324/9780429401060-1
DO - 10.4324/9780429401060-1
M3 - Chapter
SN - 9781138353428
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EP - 22
BT - Unlocking SME Finance in Asia
PB - Taylor and Francis
ER -