Small and Medium-Sized Enterprise (SME) Credit Risk Analysis Using Bank Lending Data: An Analysis of Thai SMEs

Naoyuki Yoshino, Farhad Taghizadeh-Hesary, Phadet Charoensivakorn, Baburam Niraula

Research output: Contribution to journalArticle

10 Citations (Scopus)

Abstract

Small and medium-sized enterprises (SMEs) in Asia are frequently hailed as the backbone of the economies. However, the SMEs usually have severe difficulties with raising money. Considering the bank-dominated characteristic of economies in Asia, banks are the main source of financing, and the lack of a comprehensive credit rating database has been a bottleneck for SMEs. This paper 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 Thai SMEs and classify them into subgroups based on their financial health. 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 amount of nonperforming loans to this important sector.

Original languageEnglish
Pages (from-to)383-406
Number of pages24
JournalJournal of Comparative Asian Development
Volume15
Issue number3
DOIs
Publication statusPublished - 2016 Sep 1

Fingerprint

small and medium-sized enterprise
lending
credit
bank
rating
economy
Bank lending
Credit risk
Risk analysis
Small and medium-sized enterprises
interest rate
asymmetry
loan
money
lack
health

Keywords

  • bank loan
  • credit risk
  • Small and medium-sized enterprises
  • SME

ASJC Scopus subject areas

  • Sociology and Political Science
  • Economics and Econometrics
  • Political Science and International Relations

Cite this

Small and Medium-Sized Enterprise (SME) Credit Risk Analysis Using Bank Lending Data : An Analysis of Thai SMEs. / Yoshino, Naoyuki; Taghizadeh-Hesary, Farhad; Charoensivakorn, Phadet; Niraula, Baburam.

In: Journal of Comparative Asian Development, Vol. 15, No. 3, 01.09.2016, p. 383-406.

Research output: Contribution to journalArticle

Yoshino, Naoyuki ; Taghizadeh-Hesary, Farhad ; Charoensivakorn, Phadet ; Niraula, Baburam. / Small and Medium-Sized Enterprise (SME) Credit Risk Analysis Using Bank Lending Data : An Analysis of Thai SMEs. In: Journal of Comparative Asian Development. 2016 ; Vol. 15, No. 3. pp. 383-406.
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