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Financial Access of SMEs in Thailand: What Are the Roles of the Central Bank?

Author

Listed:
  • Chaipat Poonpatpibul

    (Bank of Thailand)

  • Watsaya Limthammahisorn

    (Bank of Thailand)

Abstract

In Thailand, information asymmetry problems between lenders and SMEs are evident. Credit access is found to increase with firms’ ages, assets and sales. Firms’ funding structures lean more towards debt funding rather than equity funding for medium and large size firms as well as those in the manufacturing sector. Information asymmetry is related to inadequate business experience and financial literacy of SMEs, and insufficient risk-based credit assessment and management. As a result, lending practice is still mostly based on collateral. The government initiatives as well as the Bank of Thailand (BOT)’s financial sector master plan have been geared toward lessening the problems. However, remaining financial gaps especially for the small firms still exist. Further roles of the BOT should focus on advocating relationship-based lending, promoting an increase in credit assessment capability of financial institutions, taking into account firms’ sizes, sectors, as well as stages of development when making credit policies, promoting and improving flows of information and financial literacy, and enhancing the evolving development of unofficial micro-finance units.

Suggested Citation

  • Chaipat Poonpatpibul & Watsaya Limthammahisorn, 2005. "Financial Access of SMEs in Thailand: What Are the Roles of the Central Bank?," Working Papers 2005-06, Monetary Policy Group, Bank of Thailand.
  • Handle: RePEc:bth:wpaper:2005-06
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    File URL: http://www.bot.or.th/Thai/EconomicConditions/Publication/DiscusPaper/doclip_discussion/dp052005chaipat_thai.pdf
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    Cited by:

    1. Yot Amornkitvikai & Charles Harvie, 2018. "SOURCES OF FINANCE AND EXPORT PERFORMANCE: EVIDENCE FROM THAI MANUFACTURING SMEs," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 63(01), pages 83-109, March.
    2. Antonio Molina-García & Julio Diéguez-Soto & M. Teresa Galache-Laza & Marta Campos-Valenzuela, 2023. "Financial literacy in SMEs: a bibliometric analysis and a systematic literature review of an emerging research field," Review of Managerial Science, Springer, vol. 17(3), pages 787-826, April.
    3. Srinuan, Chalita, 2014. "Demand for internet access and use of Small and Medium Enterprises (SMEs) in Thailand," 25th European Regional ITS Conference, Brussels 2014 101440, International Telecommunications Society (ITS).
    4. Amornkitvikai, Yot & Harvie, Charles, 2016. "The Impact of Finance on the Performance of Thai Manufacturing Small and Medium-Sized Enterprises," ADBI Working Papers 576, Asian Development Bank Institute.

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