Misc

Surveys show that financial literacy levels are typically low around the world, despite the widening access to financial services and the increasing financial risks borne by households in many countries. This suggests that there will be mounting challenges for households and SMEs to invest wisely and effectively as societies age and governments shift away from defined benefit to defined contribution pension schemes. Individuals will increasingly have to make complex financial decisions to plan for their retirement and for a range of foreseen and unforeseen expenditures. All of these developments suggest that financial education should be part of a lifetime process that starts at an early age and is pursued throughout adulthood. The contributions in this book came from a symposium titled, Promoting Better Lifetime Planning through Financial Education, organized by the Asian Development Bank Institute, the Bank of Japan, the Japan Financial Services Agency, and the Organisation for Economic Co-operation and Development, held on 22-23 January 2015 in Tokyo. Amongst the topics discussed were: effective pension management, financial education curricula in schools, training for teachers of financial education, internationally comparable data on financial literacy and the evaluation of the effectiveness of financial education programs. There are also case studies on financial inclusion, regulation, and education in Indonesia, Pakistan, Philippines, Viet Nam, Thailand, and Japan.

© 2020 Asian Development Bank Institute (ADBI) and Organisation for Economic Co-operation and Development (OECD). Small and medium-sized enterprises (SMEs) are the backbone of the Asian economy. They make up more than 96% of all Asian businesses, providing two out of three private-sector jobs on the continent. Therefore, it is vital for Asia’s economic success that fully functioning support measures for SMEs are in place. However, SMEs face major challenges in accessing cheap finance, mainly because of the asymmetric information problem between suppliers and users of funds and high transaction costs. These lead to more collateral requirements for lending to SMEs with higher lending interest rates, which hinder their growth. As most Asian countries are bank-dominant economies, capital market financing is not a realistic option for SMEs. Therefore, we need to look for solutions that simplify banks’ lending to SMEs. This chapter will highlight the difficulties faced by SMEs in accessing finance and provide measures for mitigating them. The remedies proposed in this chapter include the development of a credit information infrastructure for SMEs, the utilization of credit-rating techniques for SMEs to address the problem of asymmetric information, and the development of a sustainable credit guarantee scheme to resolve the collateral issue.

© 2020 Asian Development Bank Institute (ADBI) and Organisation for Economic Co-operation and Development (OECD). There is limited access for small and medium-sized enterprises (SMEs) to bank credit. This book proposes new and sustainable models to help ease the access of SMEs to finance and boost economic growth and job creation in Asia. This book looks at the difficulties of SMEs in accessing finance and suggests ways on how to mitigate these challenges. It suggests how we can develop credit information infrastructures for SMEs to remedy the asymmetric information problem and to utilize credit rating techniques for the development of a sustainable credit guarantee scheme. The book provides illustrations of various Asian economies that implemented credit guarantee schemes and credit risk databases and is a useful reference for lessons and policy recommendations.

© 2020 Asian Development Bank Institute (ADBI) and Organisation for Economic Co-operation and Development (OECD). A credit risk database (CRD) makes it possible to mitigate the problem of information asymmetry between SMEs and financial institutions and contributes to improving SMEs’ access to finance by collecting a large number of financial statements through the mechanism of SME finances and establishing a robust statistical model. In this chapter, we use the CRD in Japan, confirm the situation in Japan, and highlight the CRD’s contribution to evaluating the creditworthiness of SMEs. We also explain how to establish the CRD as a financial infrastructure, while indicating that the CRD and the scoring model based on it have maintained their quality due to their operating system. We hope our experience contributes to the introduction of a statistical CRD composed of a large number of anonymous financial statement data in other countries and that the CRD helps improve SMEs’ access to finance as a financial infrastructure.

© Springer Nature Singapore Pte Ltd. 2018. The main obstacle to the development of Renewable Energy (RE) projects is lack of access to finance. Electricity tariff is often regulated by the government, hence, to increase the investment incentives the spill over effects originally created by energy supplies need to be used. Tax revenues are refunded to the investors in energy projects and such fiscal policy reform will increase the rate of return of energy projects. For smaller-size energy projects, this chapter provides a theoretical model for combining utilisation of carbon tax and a new way of financing risky capital, i.e., Hometown Investment Trust Funds (HITs). Because of the Basel capital requirement, and because most RE projects from the point of view of financers are considered to be risky projects, and thus many financers are reluctant to lend to them or they lend at high interest rates. This chapter theoretically shows that by taxing carbon dioxide (CO2), sulphur dioxide (SO2), and nitrogen oxides (NOx) and allocating those tax revenues to HITs, RE projects will become more feasible and more interesting for hometown investors, hence the supply of investment money to these funds will increase.

© 2020 Asian Development Bank Institute (ADBI) and Organisation for Economic Co-operation and Development (OECD). Small and medium-sized enterprise (SMEs) often face severe difficulties raising money. Considering the bank-dominated characteristic of Asian economies, banks are the main source of financing. In order to prevent the accumulation of nonperforming loans in the SME sector, it is crucial for banks to distinguish healthy SMEs from risky ones. This chapter examines how a credit rating scheme for SMEs can be developed when financial and non-financial data are not accessible just by using lending data of banks to SMEs. We employ statistical techniques on five variables from a sample of 3,272 Thai SMEs and classify them into subgroups based on their financial health. The source of data used for the credit risk analysis in this research is the National Credit Bureau of Thailand. By employing these techniques, banks could reduce information asymmetry and consequently set interest rates and lending ceilings for SMEs. This would ease financing to healthy SMEs and reduce the number of nonperforming loans to this important sector.