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    Why Do SMEs Not Borrow More from Banks? Evidence from the People’s Republic of China and Southeast Asia

    Wignaraja, Ganeshan; Jinjarak, Yothin | January 2015
    Abstract
    This study examines the relationship between firm characteristics and borrowing from commercial banks by small and medium-sized enterprises (SMEs) in the People’s Republic of China (PRC) and five Southeast Asian economies (Indonesia, Malaysia, the Philippines, Thailand, and Viet Nam). Analysis of microdata from enterprise surveys highlights key aspects of SME finance since the global financial crisis, including sources of credit, lender types, and collateral types. First, SMEs typically resort to internal sources rather than external finance (including borrowing from banks) and trade credit. Second, when it comes to external finance, SMEs typically use informal non-bank credit sources more than banks. Third, there is a positive and significant association between bank borrowing and certain characteristics of SMEs, notably financial audits, firm age, and export participation. Fourth, personal assets of SME owners tend to matter more as collateral for SME borrowing from banks than other collateral types. Improving credit guarantee systems, enhancing monitoring and credit scoring by banks, and widening the scope of collateral are possible ways to facilitate increased bank borrowing by SMEs.
    Citation
    Wignaraja, Ganeshan; Jinjarak, Yothin. 2015. Why Do SMEs Not Borrow More from Banks? Evidence from the People’s Republic of China and Southeast Asia. © Asian Development Bank Institute. http://hdl.handle.net/11540/9627.
    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
    Show allCollapse
    Citable URI
    http://hdl.handle.net/11540/9627
    Metadata
    Show full item record
    Thumbnail
    adbi-wp509.pdf (628.6Kb)
    Author
    Wignaraja, Ganeshan
    Jinjarak, Yothin
    Theme
    Development
    Finance

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    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise