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    Oil Price Fluctuations, Creditworthiness of the Financial Systems, and SME Financing in Kazakhstan

    Dosmagambet, Yergali; Oskenbayev, Yessengali; Taghizadeh-Hesary, Farhad; Mukan, Moldir | December 2018
    Abstract
    Kazakhstan remains a resource-dependent country, and the overall economy experiences external commodity price volatility. Oil export revenue exerts a positive effect on the economic development of oil-producing countries; however, depending only on oil revenue will make the economy vulnerable to oil price shocks, especially in the case of an oil price recession. This is forcing the Kazakhstan Government to pursue industrial diversification to accomplish sustainable and balanced economic development, particularly concentrating on the diversification and expansion of the SME sector. Second-tier banks remain SMEs’ main source of financing. Due to the higher risks associated with SMEs, they have to borrow money at high interest rates that endanger their growth. Since the global crisis in 2008 and the adoption of the Basel capital requirement, banks have become more reluctant to lend funds to SMEs. The government’s use of a credit guarantee scheme (CGS) relies on the willingness of second-tier banks to lend to SMEs, since they decide which SMEs to lend to and the effective interest rate. Second-tier banks, on the other hand, are dependent on the oil price volatility. This paper examines the status of the CGS in SME financing in Kazakhstan. In addition, it provides an empirical analysis using the structural VAR method that shows that the creditworthiness of the whole financial system in Kazakhstan is dependent on oil prices. Moreover, there is an effect from oil price volatility on currency value change, which also influences the financial situation of SMEs.
    Citation
    Dosmagambet, Yergali; Oskenbayev, Yessengali; Taghizadeh-Hesary, Farhad; Mukan, Moldir. 2018. Oil Price Fluctuations, Creditworthiness of the Financial Systems, and SME Financing in Kazakhstan. © Asian Development Bank Institute. http://hdl.handle.net/11540/9476.
    Keywords
    Development
    Finance
    Development Challenges
    Development Issues
    Development Problems
    Microenterprises Finance
    Commercial Finance Companies
    Enterprise Financing
    Financial Analysis
    Banking Finance And Investment
    SMEs
    Small Business Finance
    ADB
    Project finance
    Development plans
    Strategic planning
    Business Financing
    Investment Requirements
    Insurance Companies
    International Monetary Relations
    International Financial Market
    Exchange Rate
    Insurers
    Insurance stocks
    Insurance holding companies
    Insurance carriers
    Insurance agencies
    Business subsidies
    Investment companies
    Foreign investment
    Equity Finance
    International banks and banking
    Stock exchanges
    Grants
    Loans
    Communication in rural development
    Communication in community development
    Economic development projects
    Development banks
    Economic forecasting
    Environmental auditing
    Cumulative effects assessment
    Human rights and globalization
    Small business
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    Citable URI
    http://hdl.handle.net/11540/9476
    Metadata
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    Author
    Dosmagambet, Yergali
    Oskenbayev, Yessengali
    Taghizadeh-Hesary, Farhad
    Mukan, Moldir
    Theme
    Development
    Finance
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise