Challenges in Implementing the Credit Guarantee Scheme for Small and Medium-Sized Enterprises: The Case of Viet Nam

Le Ngoc Dang and Anh Tu Chuc
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Le Ngoc Dang: Asian Development Bank Institute
Anh Tu Chuc: Asian Development Bank Institute

No 941, ADBI Working Papers from Asian Development Bank Institute

Abstract: Access to credit is still one of the greatest obstacles to the growth of small and medium-sized enterprises (SMEs) in Viet Nam. To date, only 39% of SMEs have bank loans. To cater to SMEs’ need for financial sources, especially formal sources such as the banking system, the Vietnamese government has implemented a large number of supporting programs, including the credit guarantee scheme (CGS) for SMEs, which it established in 2001. Through collecting, synthesizing, and analyzing data, we aim to study the challenges involved in implementing CGSs for SMEs as well as the causes of their poor performance. The fundamental reasons we find include the strict and impractical conditions for issuing credit guaranteed loans; the lack of adequate professional competence of staff involved in the credit guaranteeing task; the fragmented relationship between the credit institution and the CGS; and the lack of a credit database platform that facilitates access to finance for SMEs by providing comprehensive and reliable creditworthiness.

Keywords: credit for SMEs; Vietnamese business environment; SMEs in Viet Nam (search for similar items in EconPapers)
JEL-codes: E51 G23 G28 H81 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2019-04-08
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-ent, nep-fdg, nep-sbm, nep-sea and nep-tra
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Citations: View citations in EconPapers (1)

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