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    Marketing: The Crucial Success Factor for Pakistan's Credit Guarantee Scheme

    Nadeem, Talha; Rasool, Raheel | December 2018
    Abstract
    Despite their significant contribution to GDP and employment, SMEs face constraints in accessing finance in Pakistan. To motivate banks to lend to SMEs, the State Bank of Pakistan introduced a “Credit Guarantee Scheme for Small and Rural Enterprises” in 2010. However, the response to the scheme was initially somewhat muted, which may arguably have been due to factors like the design of the offer, its governance structure, or the reluctance of financial institutions to engage with SMEs in general and the credit guarantee scheme in particular—or a combination thereof. Nevertheless, in this paper, we confine our focus to a discussion of how inadequate marketing diluted the scheme’s impact. Specifically, several commercial banks could not tailor elements of their marketing mix—including people, products, processes, and promotions—to take full advantage of the scheme. That said, periodic revisions of the scheme helped to address some of its shortcomings, while the expectation is that other indicators will improve due to the recent changes in the scheme’s parameters. The key finding is that policy makers can maximize the impact of a credit guarantee scheme by paying attention to the marketing mix, which sets up participating financial institutions for success (or failure) during the implementation phase. In addition, the scheme’s structure should be a long-term intervention and its intended duration should be clear at the outset so that the participating financial institutions are motivated to design and roll out specialized products that tap the full potential of credit guarantees. Furthermore, the scheme’s originators should be prepared to develop the entire ecosystem, which may include some initial hand holding of SMEs.
    Citation
    Nadeem, Talha; Rasool, Raheel. 2018. Marketing: The Crucial Success Factor for Pakistan's Credit Guarantee Scheme. © Asian Development Bank Institute. http://hdl.handle.net/11540/9481.
    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/11540/9481
    Metadata
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    adbi-wp909.pdf (601.8Kb)
    Author
    Nadeem, Talha
    Rasool, Raheel
    Theme
    Development
    Finance
    Small Medium Business
     
    Copyright 2016-2020 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2020 Asian Development Bank Institute, except as explicitly marked otherwise