Role of the Credit Risk Database in Developing SMEs in Japan: Lessons for the Rest of Asia

Satoshi Kuwahara, Naoyuki Yoshino (), Megumi Sagara and Farhad Taghizadeh-Hesary ()
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Satoshi Kuwahara: Asian Development Bank Institute
Megumi Sagara: Asian Development Bank Institute

No 547, ADBI Working Papers from Asian Development Bank Institute

Abstract: Small and medium-sized enterprises (SMEs) play a significant role in Asian economies as they contribute to high shares of employment and output. However, SMEs generally have limited access to finance compared to large enterprises. Given the bank-dominated financial systems in Asia, banks are the main source of financing for SMEs. For financial institutions, it is crucial to distinguish sound SMEs from non-healthy ones in order to avoid the accumulation of non-performing loans. Information asymmetry in this sector can be reduced by using accumulated data on SMEs and by employing credit analysis techniques, allowing lending institutions to recognize healthy SMEs. It is crucial for governments to collect SME data and prepare rich databases, such as the Credit Risk Database (CRD) of Japan. This will also help governments to formulate economic policies. In this paper we define and describe in detail the role and characteristics of Japan’s CRD in SME development and explain how it can be an example for other Asian economies to establish similar soft infrastructure that can make important contributions to SME development and boost economic growth.

Keywords: SME finance; Credit Risk Database; risk models (search for similar items in EconPapers)
JEL-codes: G21 G24 G32 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2015-11-18
New Economics Papers: this item is included in 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 (8)

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