Financing Gap and Digitalization

Iwan J. Azis ()
Additional contact information
Iwan J. Azis: Cornell University

Chapter Chapter 5 in Listen and Design, 2024, pp 77-99 from Springer

Abstract: Abstract In this chapter, two issues are discussed: financing gap and digitalization. They are frequently emphasized by analysts and social planners, although from the MSMEs’ perspective, they are not keys that cause low productivity. International data show that Indonesia is one of the top 5 economies with the highest density on MSME (per 1,000 population), yet among those having the lowest lending/GDP ratio. With the exception during COVID, credit rationing as a supply-constraint contributed to the country’s unduly low credit to MSMEs, where banks’ willingness and capacity to lend played a significant role. In addition to asymmetric information, higher transactions costs were behind the rationing. The case of trade financing was even more severe. While digital usage can help reduce financing gap and provide numerous benefits for MSME productivity, it remains to be seen whether the increase during COVID is only temporary (cyclical) or permanent (structural). Overall, the digital technology adoption remains limited. One thing for sure, for certain segments of society and certain MSME businesses, leveraging digital usage and payments is likely to remain low. The difficulty in assessing the actual usage is due to the fact that merchants and consumers may claim to use and accept the digital technology but in practice they may not really use it, either because of outright opposition, rejection, or postponement.

Date: 2024
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:spr:sprchp:978-981-97-3248-7_5

Ordering information: This item can be ordered from
http://www.springer.com/9789819732487

DOI: 10.1007/978-981-97-3248-7_5

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().