The Role of Credit Guarantee Schemes in the Development of Small and Medium-Sized Enterprises with an Emphasis on Knowledge-Based Enterprises

Roohollah Aboojafari, Alireza Daliri, Farhad Taghizadeh-Hesary (), Mohammad Mokhtari and Mohsen Ekhtiari
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Roohollah Aboojafari: Asian Development Bank Institute
Alireza Daliri: Asian Development Bank Institute
Mohammad Mokhtari: Asian Development Bank Institute
Mohsen Ekhtiari: Asian Development Bank Institute

No 930, ADBI Working Papers from Asian Development Bank Institute

Abstract: Small and medium-sized enterprises (SMEs) in their growth stage reach the point where, on the one hand, personal resources do not meet their needs, and, on the other, they do not have enough collateral to attract external finance. Access to finance can be facilitated by obtaining loans from financial institutions backed by governmental credit guarantees. Therefore, the development of a sound credit guarantee scheme will be an important step in filling the financing gap of SMEs. We investigate the situation of the credit guarantee scheme for SMEs in Iran by using the available data and interviews with activists from this field with the grounded theory method. We show the weaknesses of the Iranian credit guarantee scheme, and based on the analysis, present solutions and policy recommendations in accordance with the social and economic environment of the Islamic Republic of Iran. The most important problem is the lack of a credit database for comprehensive assessment of SMEs, especially knowledge-based enterprises. The lack of a robust database makes it impossible to carry out a comprehensive evaluation because these models require a large amount of data. The lack of accurate models makes it difficult to rate credit status and thus to issue credit guarantees. In addition, the current level of the capital of the credit guarantee funds in Iran is not sufficient given the large number of SMEs in the country.

Keywords: small and medium-sized enterprises (SMEs); knowledge-based enterprises; credit guarantee scheme (CGS); comprehensive credit evaluation (search for similar items in EconPapers)
JEL-codes: C52 G32 H81 O10 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2019-03-13
New Economics Papers: this item is included in nep-ara, nep-cfn, nep-ent, nep-sbm and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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