Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/115322 
Year of Publication: 
2014
Series/Report no.: 
ADBI Working Paper No. 505
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
In Asia, small and medium-sized enterprises (SMEs) account for a major share of employment and dominate the economy. Asian economies are often characterized as having bank-dominated financial systems and underdeveloped capital markets, in particular venture capital markets. Hence, looking for new methods of financing for SMEs is crucial. Hometown investment trust funds (HIT) are a new form of financial intermediation that has now been adopted as a national strategy in Japan. In this paper, we explain the importance of SMEs in Asia and describe about HITs. We then provide a scheme for the credit rating of SMEs by employing two statistical analysis techniques, principal components analysis and cluster analysis, and applying various financial variables to 1,363 SMEs in Asia. Adoption of this comprehensive and efficient method would enable banks to group SME customers based on financial health, adjust interest rates on loans, and set lending ceilings for each group. Moreover, this method is applicable to HITs around the world.
Subjects: 
smes
credit risk
hometown investment trust funds
venture capital markets
asian capital markets
JEL: 
G21
G24
G28
Document Type: 
Working Paper

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