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    The Role of SMES in Asia and Their Difficulties in Accessing Finance

    Yoshino, Naoyuki; Taghizadeh-Hesary, Farhad | December 2018
    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 Asian economies’ economic success that they have fully functioning support measures for SMEs. However, SMEs face major challenges in accessing cheap finance, mainly because of the asymmetric information problem between suppliers and demanders of funds and the 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 make the bank lending to SMEs easier. This study will highlight the difficulties of SMEs in accessing finance and provide measures for mitigating them. The remedies proposed in this paper are the development of credit information infrastructures for SMEs and the utilization of credit-rating techniques for SMEs to address the asymmetric information problem and the development of a sustainable credit guarantee scheme to solve the collateral issue of the SMEs and ease their access to finance.
    Citation
    Yoshino, Naoyuki; Taghizadeh-Hesary, Farhad. 2018. The Role of SMES in Asia and Their Difficulties in Accessing Finance. © Asian Development Bank Institute. http://hdl.handle.net/11540/9483.
    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/11540/9483
    Metadata
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    adbi-wp911.pdf (649.1Kb)
    Author
    Yoshino, Naoyuki
    Taghizadeh-Hesary, Farhad
    Theme
    Development
    Finance
    Small Medium Business
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise