ADB-OECD Study on Enhancing Financial Accessibility for SMEs: Lessons from Recent Crises

Date: April 2014
Type: Books
Subject:
ISBN: 978-92-9092-488-1 (print), 978-92-9092-489-8 (web)

Description

Enhancing financial accessibility for small and medium-sized enterprises (SMEs) is a policy priority at the country and global level. Financial inclusion and financial deepening are key to the development of the SME sector, which is crucial in the quest of countries for sustainable growth, job creation and social cohesion. In the post-crisis environment, this will require increasing access to financial services and improving bank lending efficiency, as bank financing will continue to be crucial for the SME sector, as well as broadening the range of financing instruments available to SMEs to better serve their diversified financing needs along the business life cycle and to improve support to innovative and high growth firms.

ADB and the Organisation for Economic Co-operation and Development (OECD) have long recognized the importance of SME finance and the need to support countries in strengthening their domestic financial systems and broadening the finance options available to SMEs. With this in mind, sharing Asian and OECD experiences on SME financing would result in insightful discussions on improving SME access to finance at a time of global financial uncertainty. Based on intensive discussions in two workshops organized by ADB in Manila on 6-7 March 2013 and by the OECD in Paris on 21 October 2013, the two organizations together compiled this study report on enhancing financial accessibility for SMEs, especially focusing on lessons from the past and recent crises in Asia and OECD countries.

This report takes a comparative look at ADB and OECD experiences, and aims to identify promising policy solutions for creating an SME base that is resilient to crisis, from a viewpoint of access to finance, and which can help drive growth and development.

Lessons Learned

Chapter 4 of the report highlights the following:

  • SMEs face structural challenges in their access to finance in Asia and OECD countries. Both demand and supply factors intervene;
  • SMEs depend on debt instruments both in Asia and OECD countries;
  • Public financial institutions can have an anticyclical role, providing credit during economic downturns;
  • Similar challenges in Asia and OECD: how to increase SME bankability and bank efficiency;
  • The financial crisis had a different impact in Asia and OECD countries;
  • Basel III will have a different impact in Asia and OECD countries;
  • The recent financial crises have motivated countries to develop alternative financing models in SME finance beyond the conventional ways of relying on bank lending;
  • Policy makers need to develop a comprehensive range of policy options that support wide-ranging financing models for SMEs. 

Contents

  • Foreword
  • Emerging Trends in SME Finance and Policies
  • Bank Lending Efficiency
    • Financial Infrastructure for SMEs
    • Basel Capital Accords and SMEs
    • Sustainable Credit Guarantee Schemes for SMEs
    • Trade Finance and Supply Chain Finance for SMEs
    • The Role of Public Financial Institutions for SMEs
  • Diversified Financing Models
    • Nonbank Financing for SMEs: The Role of Factoring for Financing SMEs in Asia
    • Capital Market Financing for SMEs
  • Challenges for SME Access to Finance: Lessons from Experiences of ADB and OECD