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A vibrant stratum of small and medium-sized enterprises (SMEs) is critical for the growth and development of Asian economies. These enterprises generate employment, contribute to investment, participate in value chains, and support innovation. SMEs that seek to sustain and grow their operations, however, face a variety of constraints, many of which are directly related to size. These so-called "size-induced market failures" create a role for public policy interventions by governments throughout the region. This book focuses on the market failures encountered by enterprises in the key areas of technology and innovation, credit and finance, education and skills, and market access. Obstacles to participation in the rapidly expanding regional and global value chains are also examined. Among a variety of issues, the book explores the "missing middle" in credit facilities for enterprises that are beyond microcredit but not yet able to secure regular loans from banks. The book investigates the barriers to innovation and how best to combine internal and external research and development. It also looks at the hiring versus training options to build human capital. The various chapter authors examine national and multicountry experiences in South and East Asia, ranging from those in Pakistan to Japan.
Small and medium-sized enterprises (SMEs), including start-ups and microenterprises, have emerged as an engine of growth for most of the countries in Asia and the Pacific. Their contributions are well-known; they increase production and exports, generate employment and facilitate income growth amongst the population. SMEs serve as a seedbed for enterprise development. Each country has evolved its own policies, institutional framework and support mechanisms for SMEs according to its needs, stage of economic development and culture. The experience of each one of them is unique. Developing a policy guidebook for SME development in the developing countries of the Asia-Pacific region has been a daunting task, when the variety of experiences and the varied policies and programmes of each country are taken into consideration. This book documents specific policy guidelines based on various countries' strategies, their best practices and their applicability in the context of development of SMEs in Asia and the Pacific in addition to the vast experience and expertise of the contributors, researchers and authors of the publication. Many countries as well as various multilateral and bilateral development agencies have implemented a variety of interventions in Asia and the Pacific in line with their SME development strategies, typically in the following key areas: (a) Business environment, including policy and regulatory framework and infrastructure development; (b) Entrepreneurship; (c) Financing; (d) Business development services; (e) Innovation and technology; and (f) Market access. Their interventions typically use several modalities to address the key issues, including policy advocacy, institutional capacity building, human resource development and direct support to enterprises. This comprehensive review of the SME policies and programmes in Asia and the Pacific demonstrates that the nations of the region appreciate the importance of SME development. The SME sector in many countries in the region suffers from numerous threats and challenges that necessitate a proactive approach from policymakers. National governments and various stakeholders in charge of policy planning would do well to recognize not only the threats and challenges, but also the changing needs of SMEs. In this regard, the following useful guidelines are identified for effective policymaking: (a) The reduction of entry barriers (and thus costs) for new businesses; (b) The importance of cash flow to SMEs -- the major reason most new and small businesses fail is not a lack of profits but a lack of cash; (c) The strengthening of entrepreneurship through training and education; and (d) The strengthening of networking and information dissemination, given the fact that a lack of networks and information hinders effective deployment of technology and business development services as well as collaboration with other firms. This publication should provide the basis for deliberations on policy formulation for SME development in Asia and the Pacific, developing and refining the institutional framework based on intercountry experiences. Implementation of policy options and their appropriate selection, based on key factors, is highlighted. The book may also serve as a training manual for entrepreneurs, educators and business associations, such as chambers of commerce and industry, for building up the capacity of SMEs.
The importance of financial inclusion is increasingly recognized by policymakers around the world. Small and medium-sized enterprise (SME) financial inclusion, in particular, is at the core of the economic diversification and growth challenges many countries are facing. In the Middle East and Central Asia (MENAP and CCA) regions, SMEs represent an important share of firms, but the regions lag most others in terms of SME access to financing.
World Bank Technical Paper No. 304. Reviews the status and availability in developing countries of photovoltaic (PV) technology and looks at the prospects for using this technology in light of current energy use and costs of other energy sources. The report provides the necessary background information and highlights the questions raised and the calculations that must be made whenever PV applications are being considered in the developing world
Small and medium-sized enterprises (SMEs) are widely regarded as the backbone of economies and make a unique contribution to gross domestic product, exports, and employment. Yet, SMEs face multiple challenges in gaining access to finance that can fuel their growth. This publication scrutinizes the multiple factors affecting SMEs’ access to finance and the impact of credit guarantee schemes (CGSs), examines country case studies from across the globe, and highlights the financial and economic additionality of CGSs when they are rigorously setup. To support Asia and Pacific economies, the publication suggests operational policy recommendations for the key priority areas of CGSs, focusing on legal and regulatory setup, corporate governance, services offered, risk management, and monitoring.
In 2011 the World Bank—with funding from the Bill and Melinda Gates Foundation—launched the Global Findex database, the world's most comprehensive data set on how adults save, borrow, make payments, and manage risk. Drawing on survey data collected in collaboration with Gallup, Inc., the Global Findex database covers more than 140 economies around the world. The initial survey round was followed by a second one in 2014 and by a third in 2017. Compiled using nationally representative surveys of more than 150,000 adults age 15 and above in over 140 economies, The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution includes updated indicators on access to and use of formal and informal financial services. It has additional data on the use of financial technology (or fintech), including the use of mobile phones and the Internet to conduct financial transactions. The data reveal opportunities to expand access to financial services among people who do not have an account—the unbanked—as well as to promote greater use of digital financial services among those who do have an account. The Global Findex database has become a mainstay of global efforts to promote financial inclusion. In addition to being widely cited by scholars and development practitioners, Global Findex data are used to track progress toward the World Bank goal of Universal Financial Access by 2020 and the United Nations Sustainable Development Goals. The database, the full text of the report, and the underlying country-level data for all figures—along with the questionnaire, the survey methodology, and other relevant materials—are available at www.worldbank.org/globalfindex.
The Asia SME Finance Monitor 2014 is a knowledge sharing product on small and mediumsized enterprises (SMEs) in Asia and the Pacific focusing on SME access to finance. This publication reviews various country aspects of SME finance covering the banking sector, nonbank sector, and capital markets. It is expected to support evidencebased policy making and regulations on SME finance in the region.
Asia has made significant progress in financial inclusion, but both its across-country and intra-country disparities are among the highest in the world. The gaps between the rich and the poor, rural and urban populations, and men and women remain deep. Income is the main determinant of the level of financial inclusion; but other factors, such as geography, financial sector structure, and policies, also play important roles. While some countries in the Asia-Pacific region are leaders in fintech, on average the region lags behind others in several important areas such as online (internet) purchases, electronic payments, mobile money, and mobile government transfers. This Departmental Paper aims to take stock of the development and current state of financial inclusion and shed light on policies to advance financial inclusion in the region. The research focuses on the impact of financial inclusion on economic growth, poverty reduction, and inequality, linkages between financial inclusion and macroeconomic policies, as well as structural policies that are important for improving financial inclusion. Given the increasing importance of financial technologies (fintech), the paper also provides a snapshot of the fintech landscape in the Asia-Pacific.
This book's prime audience is government policy-makers. It provides a policy framework for governments to increase micro, small and medium enterprises' access to financial services?one which is based on empirical evidence from around the world. Financial sector policies in many developing countries often work against the ability of commercial financial institutions to serve this market segment, albeit, often unintentionally. The framework guides governments on how to best focus scarce resources on three things: ? developing an inclusive financial sector policy; ? building healthy financial ins
This book records the first success stories of a new form of financial intermediation, the hometown investment fund, that has become a national strategy in Japan, partly to meet the need to finance small and medium-sized enterprises (SMEs) after the devastating earthquake and tsunami in March 2011. The hometown investment fund has three main advantages. First, it contributes to financial market stability by lowering information asymmetry. Individual households and firms have direct access to information about the borrowing firms, mainly SMEs, that they lend to. Second, it is a stable source of risk capital. The fund is project driven. Firms and households decide to invest by getting to know the borrowers and their projects. In this way the fund distributes risk but not so that it renders risk intractable, which was the problem with the “originate and distribute” model. Third, it contributes to economic recovery by connecting firms and households with SMEs that are worthy of their support. It also creates employment opportunities, at the SMEs as well as for the pool of retirees from financial institutions who can help assess the projects. Introduction of the hometown investment fund has huge global implications. The world is seeking a method of financial intermediation that minimizes information asymmetry, distributes risk without making it opaque, and contributes to economic recovery. Funds similar to Japan’s hometown investment fund can succeed in all three ways. After all, the majority of the world’s businesses are SMEs. The first chapter explains the theory behind this method, and the following chapters relate success stories from Japan and other parts of Asia. This book should encourage policymakers, economists, lenders, and borrowers, especially in developing countries, to adopt this new form of financial intermediation, thus contributing to global economic stability.