Financing small and medium enterprises in Asia and the Pacific
Journal of Entrepreneurship and Public Policy
ISSN: 2045-2101
Article publication date: 13 April 2015
Abstract
Purpose
The purpose of this paper is to propose policy suggestions for the financing of small and medium enterprises (SMEs) in the Asia-Pacific region. Recent literature suggests that lack of capital is the most severe constraint for SME survival and growth. Enabling policymakers to assist SMEs in their search for financing will boost economic growth.
Design/methodology/approach
The methodology includes both quantitative and qualitative components. Current World Bank data on the strength of various financial institutions in the countries of interest is analyzed to discover areas of improvement. Additionally, 32 experts from East and South Asia were interviewed several times to determine areas of concern in financing SMEs. Their responses and the evidence from the World Bank data form the basis of the policy prescriptions in the paper.
Findings
Financing is a critical constraint for SMEs for several reasons. Many SME owners do not manage working capital effectively, information asymmetry between banks and SMEs retards the loan application and approval process, and underdeveloped equity markets deny SMEs future growth opportunities. Policymakers can ameliorate conditions by serving as facilitators and communicators; governments should not provide financing directly if possible.
Practical implications
It is hoped and expected that the policy prescriptions offered herein will enhance the growth and survival prospects of SMES, thereby creating more employment, innovation, and economic growth.
Originality/value
The main contribution of this work is its scope. While the financing of SMEs is a familiar topic, the review of issues and policies in East and South Asia, and their distillation into practical advice for officialdom, is what makes this manuscript unique.
Keywords
Acknowledgements
The authors appreciate useful inputs provided by Sailendra Narain, Diana Dai, Paradai Adisayathepkul, Linghe Ye, and Julia Huepfl. The opinions expressed in this paper are those of the authors and do not necessarily reflect the views of the United Nations.
Citation
Abe, M., Troilo, M. and Batsaikhan, O. (2015), "Financing small and medium enterprises in Asia and the Pacific", Journal of Entrepreneurship and Public Policy, Vol. 4 No. 1, pp. 2-32. https://doi.org/10.1108/JEPP-07-2012-0036
Publisher
:Emerald Group Publishing Limited
Copyright © 2015, Emerald Group Publishing Limited