Transcript Credit Information and Guarantee Systems in the ASEAN

Counseling and advisory
services for improving the
capacity and the capability of
SMEs
Presented by Naoyuki Yoshino
Professor, Keio University, Japan,
July 25, 2011
Video Presentation from Japan
[email protected]
1
Outline of Presentation
1, SME dominates Asian Economy
2, SMEs are difficult to borrow money
from Banks
3, Heavy reliance on Micro-credit
4, Book Keeping
Data collection
5, Financial Education
6, Interest rate, Amount of sales
2
3
4
SMEs in China
(Red Mark is SMEs’ share)
5
6
Loan Supply Curve
SME versus Large Companies
Interest
Rate
SME
Loan
Supply
Curve
Large
Companies
Loan Supply
7
Lack of Data for SMEs
Credit
Rating
Capital
Market
Stocks and Bonds
Large
corporations
Banks
SMEs
Credit
Guarantee
Micro Credit
8
9
10
Basel Capital Requirements
1,
2,
3,
4,
5,
6,
Adequate Capital for Banks
To keep healthy
SME loans will decline
Micro credit
Loan sharks
Education to SMEs and borrowers
11
Keeping books by SMEs
<Financial statements>
(i) Cash & deposits
(ii) Amount of Sales
(iii) Inventories
(iv) Buying price
(v) Amount of goods laid in
(vi) Various costs
Equipment and Personal costs
(vii) net profits
12
How much interest rate
could SME pay ?
1,
2,
3,
4,
5,
Amount of loans / Net profits
number of years to borrow
expected growth rate of sales
interest rate SME has to pay
ratio of savings out of net profits
13
rLt 1  Ct  Yt  Lt ....(1)
Ct  cYt
Yt  (1  a)Yt 1
a
（c：marginal propensity to consume）
（a: Expected growth rate of net sales）
Y
p y


Y
p
y ＝（Rate of Inflation）＋（Growth rate of real net sales）1
L0 ＝Initial amount of borrowing
Y0 ＝initial net sales
Ln ＝Amount of loans at the end of n-th period.
14
Financial Planning for SMEs
(i) Education for SMEs
(ii) Japan’s Government Bank
provided consultation for SMEs
(iii) Financial Education for
individuals and SMEs
 Text book and Education training
15
Bankers and Micro credits
have to provide honest service
to SME borrowers
Association of Micro credit companies
was established in 2009 in Japan.
Education to money lenders
(micro credit companies)
Self regulations by the Association
16
Four Accounts by SMEs
Would SME disclose true data ?
Tax Authority
Banks
SMEs
His Own
Showing to
his wife
17
SME Data base
Credit Guarantee
Corporations
SMEs
(14.4million
data)
(Collect Data of SMEs)
52
Financial
Institutions
200
Regional Banks
Credit Associations
Defaults
Credit Cooperatives
(1.7million
1, Government Support
Government Banks
data)
2, Reliability
3, Security of Information Central Bank
CRD
18
Credit Rating System
1, AAA, AA, BBB …………..
Single Number
2, Various Characteristics needed to be
focused on:
(i) Growth potential
(ii) Good Management
(iii) Technology
etc.
3, Sudden Down-grading after Crisis
19
Loan Supply Curve
SME versus Large Companies
Interest
Rate
On
Loans

SME
Loans
Large
Companies
Loan Supply
20
CRD (Credit Risk Database)
Membership composition (Oct,2010)
Credit guarantee corporations
52
Government financial institutions
Private financial institutions
35
Credit-rating agencies, etc.
5
Small and Medium Enterprises Agency,
Bank of Japan, etc.
5
3
Total 200
Annual fee=4 million (1st Year) 3 million yen (2nd yr)
21
CRD Data: Since 1995
Corporations
March-2010
Total
11,450,000 (1,887,000)
Default data 1,368,000 (239,000)
Individual owned company
Total
2,920,000 (887,000)
Default data 369,000 (369,000)
Number of (Number of
Accounts companies)
22
Sectors (number of companies)
1, Construction
418,000
2, Manufacturing
345,000
3, Transport & communications 77,000
4, Wholesale
245,000
5, Retail
258,000
6, Food & Restaurants
71,000
7, Real estates
105,000
8, Services
256,000
9, Others
13,000
23
Default Risks, Model Estimation
24
Risk Based Interest Rate
(1) General Credit Risk
(2) Credit Cost Ratio
[Default ratio}x(1-recovery rate)
(3) Costs = Personal and
Equipment
(4) Interest rate to raise money
(5) Monitoring of SMEs by banks
25
CRD Data Collection
 Financial data – B/S and P/L
 Non-financial data -E.g. date of
establishment, geographical location
and Successor or not
 Default data
3 months or more arrears;
de facto bankruptcy;
subrogation by credit guarantee
corporations
possible bankruptcy.
26
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References
Yoshino, Suzuki, Maehara and Abe (2009)
Development of Corporate Credit
Information Database and Credit
Guarantee System,
ASEAN Secretariat, Feb. 2009.
Yoshino, N.(2010),OECD, Southeast Asian
Economic Outlook, Fall 2010, Chapter 6
Yoshino, N., OECD-ADB, THE GLOBAL
IMBALANCE AND THE DEVELOPMENT OF
CAPITAL FLOWS AMONG ASIAN COUNTRIES
27
March 17, 2011, OECD
28
Asia’s Characteristics
1, Large Share oｆ SMEs (Small
and Medium Enterprises)
2,
3,
4,
5,
Bank Dominated Market
Long term commitment
Large Share of Micro Credit
High Savings Rate
29