As Japanese small and medium enterprises (SMEs) increasingly advance into other Asian economies, they often find it difficult or costly to secure necessary financing for their local business operations. In order to solve this problem, it is essential to reduce information asymmetry between SMEs and local banks, which involves the collection of financial and non-financial data. In Japan, the Credit Risk Database (CRD) Association has been collecting financial data on SMEs for more than 10 years, and it has now become possible to rate SMEs by analyzing a large amount of data accumulated to date. However, this is not the case in some of the other Asian economies. Despite their overwhelming presence in these economies, SMEs are often unable to take out bank loans due to information asymmetry and have to borrow from local non-bank money lenders at significantly higher costs. In this research project, we seek to transplant Japan's experience with the CRD to such countries as Thailand, Indonesia, and Malaysia in order to build a database that will not only facilitate financing for local SMEs but also enable Japanese SMEs operating in these countries to secure loans more efficiently from local financial institutions. This will enable SMEs to be rated.
In addition, we will examine how non-financial data (soft data) on SMEs are being utilized and to what extent such information is taken into account by Japanese banks in making loan decisions. The findings from this will be utilized in collecting data on SMEs in other Asian countries.
Information asymmetry between lenders (banks) and borrowers (SMEs) would enhance smooth financing to SMEs and lower the interest rate they pay. Asian SMEs is a source of economic growth. Data collection and data analysis will enhance SME activities in Japan and the Asian region.
This project is pursued together with the International Affairs Office of Small and Medium Enterprise Agency.
July 12, 2011 - May 31, 2013