ADBI Working Paper Series
SOLUTIONS FOR SMALL AND
MEDIUM-SIZED ENTERPRISES’
DIFFICULTIES IN ACCESSING
FINANCE: ASIAN EXPERIENCES
Naoyuki Yoshino and
Farhad Taghizadeh-Hesary
No. 768
August 2017
Asian Development Bank Institute
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Suggested citation:
Yoshino, N, and F. Taghizadeh-Hesary. 2017. Solutions for mitigating SMEs’ difficulties
in accessing finance:
Asian experiences
. ADBI Working Paper 768. Tokyo: Asian
Development Bank Institute. Available: https://adb/publications/solutions-smes-
difficulties-accessing-finance-asian-experiences
Please contact the authors for information about this paper.
Email: nyoshino@adbi, farhadth@gmail
Naoyuki Yoshino is dean of the ADB Institute and professor emeritus at Keio University,
Tokyo, Japan. Farhad Taghizadeh-Hesary is assistant professor of economics, also at
Keio University.
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ADBI Working Paper 768 Yoshino and Taghizadeh-Hesary
Abstract
Small and medium-sized enterprises (SMEs) are the backbone of the Asian economy. They
make up more than 96% of all Asian businesses that provide two out of three private sector
jobs in the continent. Therefore, it is vitally important for the Asian economies’ economic
success that they have fully functioning support measures for SMEs. However, SMEs face
major challenges in accessing cheap finance, mainly because there is an asymmetric
information problem between suppliers and demanders of funds, which hinders their growth.
This paper will highlight the difficulties of SMEs in accessing finance, and provides remedies
for mitigating them. The remedies proposed in this paper include the development
of credit information infrastructures for SMEs to remedy the asymmetric information problem,
utilization of credit rating techniques for SMEs, the development of a sustainable credit
guarantee scheme, the development of specialized private banks for SME financing, and the
introduction of new ways of providing community-based financing such as hometown
investment trust funds. The paper will provide operational examples from developed Asian
economies such as Japan and the Republic of Korea, and developing Asian economies such
as Thailand with a view to them being implemented in the rest of Asia.
Keywords: SMEs, Asian economies, credit rating, CRD, SME bank
JEL Classification: G21, G24, G32
ADBI Working Paper 768 Yoshino and Taghizadeh-Hesary
Contents
1.INTRODUCTION ......... 1
2.SMEs’ DIFFICULTIES IN ACCESSING FINANCE ..... 3
2.1Lack of Information Infrastructure for SMEs .... 5
3.REMEDIES FOR TACKLING SMEs’ DIFFICULTIES IN ACCESSING FINANCE ...... 6
3.1Diversifying Channels of Financing ..... 6
3.2Development of SME Credit Risk Databases, Credit Bureaus,
and SME Credit Rating .......... 12
3.3SME Credit Rating ..... 14
4.CONCLUSIONS ........ 16
REFERENCES ......... 18
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