A New Regime of SME Finance in Emerging Asia: Empowering Growth-Oriented SMEs to Build Resilient National Economies
Small and medium enterprises (SMEs) stimulate domestic demand through job creation, innovation, and competition; thus, they can be a driving force behind a resilient national economy. In addition, SMEs involved in global production supply chains have the potential to encourage international trade. Prioritizing SME development is therefore critical for promoting inclusive economic growth in most economies in Asia. Adequate access to finance is crucial for SMEs to survive and eventually grow beyond their SME status. In Asia, the reality is that SMEs have poor access to finance. It is one of the core factors impeding SME development. Information asymmetry between lenders and SME borrowers increases adverse selection and moral hazard risks for financial institutions, and is responsible for widening the supply–demand gap in SME financing. Given the diversified nature of SMEs, there is no one-size-fits-all financing solution. The improvement of lending efficiency and the diversification of financing modalities can help expand SMEs’ access to finance, particularly given the largely bankcentered financial system in Asia. This paper discusses a new regime of SME finance amid an era of global imbalances, with empirical analyses of bank financing for SMEs in select Asian countries.
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- Park, Cyn-Young & Majuca, Ruperto & Yap, Josef, 2010.
"The 2008 Financial Crisis and Potential Output in Asia: Impact and Policy Implications,"
Working Papers on Regional Economic Integration
45, Asian Development Bank.
- Cyn-Young Park & Ruperto P. Majuca & Josef T. Yap, 2010. "The 2008 Financial Crisis and Potential Output in Asia : Impact and Policy Implications," Finance Working Papers 23101, East Asian Bureau of Economic Research.
- Yap, Josef T. & Majuca, Ruperto P. & Park, Cyn-Young, 2010. "The 2008 Financial Crisis and Potential Output in Asia: Impact and Policy Implications," Discussion Papers DP 2010-11, Philippine Institute for Development Studies.
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