Empowering SMEs

After the global financial crisis, many Asian economies struggled to promote sustainable growth due to the decline in their export revenues. One solution to overcome this problem is to promote the empowerment of small and medium-sized enterprises (SMEs), including micro-enterprises, as an engine of growth. However, SMEs consistently face difficulties in obtaining access to credit, both from traditional bank-lending channels and capital markets. Limited access to traditional bank-lending channels is mainly due to information asymmetries, whereas limited access to capital markets is mainly due to the size of their business.

Development of comprehensive and integrated SME credit databases and credit scoring methodologies could enable financial institutions to reliably score credit risk, thereby reducing information asymmetry. Crowdfunding and hometown investment trust funds provide better access to finance for SMEs in lieu of traditional capital markets.