Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/222672 
Year of Publication: 
2018
Series/Report no.: 
ADBI Working Paper Series No. 905
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
SMEs often have severe difficulties raising money. Considering the bank-dominated characteristic of economies in Asia, banks are the main source of financing. In order to prevent the accumulation of non-performing loans in the small and medium-sized enterprise (SME) sector, it is crucial for banks to distinguish healthy SMEs from risky ones. This chapter examines how a credit rating scheme for SMEs can be developed when access to other financial and non-financial ratios is not possible by using data on lending by banks to SMEs. We employ statistical techniques on five variables from a sample of 3,272 Thai SMEs and classify them into subgroups based on their financial health. The source of data used for the credit risk analysis in this research is the National Credit Bureau of Thailand. By employing these techniques, banks could reduce information asymmetry and consequently set interest rates and lending ceilings for SMEs. This would ease financing to healthy SMEs and reduce the number of non-performing loans to this important sector.
Subjects: 
small and medium-sized enterprises
SME
credit risk analysis
NCB
JEL: 
G21
G23
G24
G32
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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