COVID-19 and regional solutions for mitigating the risk of SME finance in selected ASEAN member states

Farhad Taghizadeh-Hesary (), Han Phoumin and Ehsan Rasoulinezhad

Economic Analysis and Policy, 2022, vol. 74, issue C, 506-525

Abstract: The main objective of this paper is to identify the determining factors of the optimal credit guarantee ratio in four members of the Association of Southeast Asian Nations (ASEAN), namely Indonesia, Singapore, the Philippines, and Malaysia, by employing statistical techniques and the Vector Autoregressive (VAR) approach. The empirical findings prove that the loan default ratio is the optimal credit guarantee ratio’s main determining factor. The empirical findings confirm that the credit guarantee ratio needs to be increased in the ASEAN region to help SMEs survive in the wake of the COVID-19 pandemic and for the post-COVID-19 economic recovery. The results show that the credit guarantee ratio should vary for different countries based on the macroeconomic climate and for each bank or, in other words, for groups of banks with similar financial soundness. The practical policy recommendations are establishing a regional credit guarantee scheme (RCGS) and evaluating banks’ soundness for setting the optimal credit guarantee ratio.

Keywords: Small and medium-sized enterprises (SME) finance; Credit guarantee scheme; ASEAN; COVID-19; Economic recovery (search for similar items in EconPapers)
JEL-codes: G21 H81 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (75)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0313592622000418
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:74:y:2022:i:c:p:506-525

DOI: 10.1016/j.eap.2022.03.012

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().