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Optimal Credit Guarantee Ratio for Asia

dc.contributor.authorNaoyuki Yoshino
dc.contributor.authorFarhad Taghizadeh-Hesary
dc.date.accessioned2016-09-14T10:37:24Z
dc.date.available2016-09-14T10:37:24Z
dc.date.issued2016-07-15
dc.identifier.urihttp://hdl.handle.net/11540/6623
dc.description.abstractDifficulty in accessing finance is one of the critical factors constraining the development of small and medium-sized enterprises (SMEs) in Asia. Owing to their significance to national economies, it is important to find ways to provide SMEs with stable finance. One efficient way to promote SME financing is through credit guarantee schemes, where the government guarantees a portion (ratio) of a loan provided by a bank to an SME. This research provides a theoretical model and an empirical analysis of factors that determine optimal credit guarantee ratio. The ratio should be able to fulfill the government's goal of minimizing the bank's nonperforming loans to SMEs, and at the same time fulfill the government policies for supporting SMEs. Our results show that three categories of factors can determine the optimal credit guarantee ratio: (i) government policy, (ii) macroeconomic conditions, and (iii) banking behavior. It is crucial for governments to set the optimal credit guarantee ratio based on macroeconomic conditions and vary it for each bank or each group of banks based on their soundness, in order to avoid moral hazard and ensure the stability of lending to SMEs.
dc.languageEnglish
dc.publisherAsian Development Bank Institute
dc.titleOptimal Credit Guarantee Ratio for Asia
dc.typeWorking Papers
dc.subject.expertADB
dc.subject.expertProject finance
dc.subject.expertDevelopment plans
dc.subject.expertStrategic planning
dc.subject.expertBusiness Financing
dc.subject.expertInvestment Requirements
dc.subject.expertInsurance Companies
dc.subject.adbDevelopment
dc.subject.adbFinance
dc.subject.adbDevelopment Challenges
dc.subject.adbDevelopment Issues
dc.subject.adbDevelopment Problems
dc.subject.adbMicroenterprises Finance
dc.subject.adbCommercial Finance Companies
dc.subject.adbEnterprise Financing
dc.subject.naturalInsurers
dc.subject.naturalInsurance stocks
dc.subject.naturalInsurance holding companies
dc.subject.naturalInsurance carriers
dc.subject.naturalInsurance agencies
dc.subject.naturalBusiness subsidies
dc.subject.naturalInvestment companies
dc.subject.naturalForeign investment
dc.subject.naturalInvestment companies
dc.subject.naturalInternational banks and banking
dc.subject.naturalStock exchanges
dc.subject.naturalGrants
dc.subject.naturalLoans
dc.title.seriesADBI Working Paper Series
dc.title.volumeNo. 586
dc.contributor.imprintAsian Development Bank Institute
oar.themeDevelopment
oar.themeFinance
oar.adminregionAsia and the Pacific Region
oar.countryBangladesh
oar.countryBhutan
oar.countryIndia
oar.countryMaldives
oar.countryNepal
oar.countrySri Lanka
oar.countryBrunei Darussalam
oar.countryCambodia
oar.countryIndonesia
oar.countryLao People's Democratic
oar.countryMalaysia
oar.countryMyanmar
oar.countryPhilippines
oar.countrySingapore
oar.countryThailand
oar.countryViet Nam
oar.countryCook Islands
oar.countryFiji Islands
oar.countryKiribati
oar.countryMarshall Islands
oar.countryFederated States of Micronesia
oar.countryNauru
oar.countryPalau
oar.countryPapua New Guinea
oar.countrySamoa
oar.countrySolomon Islands
oar.countryTimor-Leste
oar.countryTonga
oar.countryTuvalu
oar.countryVanuatu
oar.countryAfghanistan
oar.countryArmenia
oar.countryAzerbaijan
oar.countryGeorgia
oar.countryKazakhstan
oar.countryKyrgyz Republic
oar.countryPakistan
oar.countryTajikistan
oar.countryTurkmenistan
oar.countryUzbekistan
oar.countryPeople's Republic of China
oar.countryHong Kong
oar.countryChina
oar.countryRepublic of Korea
oar.countryMongolia
oar.countryTaipei,China
oar.identifierOAR-006301
oar.authorYoshino, Naoyuki
oar.authorTaghizadeh-Hesary, Farhad
oar.importtrue
oar.gsauthorNaoyuki Yoshino
oar.gsauthorFarhad Taghizadeh-Hesary
oar.googlescholar.linkpresenttrue


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  • ADBI Working Papers
    The Asian Development Bank Institute (ADBI) Working Paper series is a continuation of the formerly named Discussion Paper series which began in January 2003. The numbering of the papers continued without interruption or change. ADBI was established in 1997 in Tokyo, Japan, to help build capacity, skills, and knowledge related to poverty reduction and other areas that support long-term growth and competitiveness in developing economies in Asia and the Pacific.

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