SMEs(small and medium enterprises) have been recognized as a driving force that can create new employment and technology. There is also a tremendous need to promote innovative SMEs to resolve the polarization of economy and to lead a sustainable growth. The government has established and re-established a foundation for SME financing policy to address these issues. However, not a few innovative SMEs can always be driven out from the SME financing policy and financial market either by adverse selection problems or by moral hazard problems.
Credit assessment of SMEs requires both financial statements and non-financial information. However, most financial institutions lack SME experts and non-financial information databases. Also, SMEs have different financing needs, which cannot readily be satisfied only by loans from commercial financial institutions. The commercial financial institutions rely too much on collateral or secured loans, and they are also very sensitive to the business cycle; therefore, exacerbate it by lending too heavily at the top of the cycle and causing a credit crunch when the economy is weak and credit is most needed. Another serious problem of SME finance is the extreme risk aversion on the part of commercial financial institutions; they generally issue short-term loans, and this naturally renders SME finance unstable. As a result, blue chip companies and gray-zone enterprises are accorded much better interest rates and much larger loans.
This report addresses some key elements of SME finance. First, SMEs must be properly valued according to their business risk and financial need varying throughout the life-cycle. Second, SMEs should be granted all necessary forms of support, e.g., creation of a comprehensive financial database, integration of financial support system, etc. The database must include inter-business credit, collateral, guarantee, and tax information, as well as general financial statements, which should be shared among financial institutions engaged in SME finance. Third, each financial institutions should have a client-friendly support system under which SMEs voluntarily report their credit information and financial needs on a standard form. Fourth, the government should integrate and rationalize the public finance and guarantee system, and offer financial consulting service to SMEs to encourage their use of direct financing. Other important considerations for SME finance such as collateralized or insured loan, inter-business credit, relationship-banking system are discussed as well.
중소기업금융의 이해(A Study on the SME Finance of Korea)
|Series Title; No||금융조사보고서 / 2008-04|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy
Industry and Technology < Entrepreneurship
|Holding||한국금융연구원; KDI 국제정책대학원|