COVID-19 and regional solutions for mitigating the risk of SME finance in selected ASEAN member states
Economic Analysis and Policy
; 2022.
Article
in English
| ScienceDirect | ID: covidwho-1734339
ABSTRACT
The main objective of this paper is to identify the determining factors of the optimal credit guarantee ratio in four members of the Association of Southeast Asian Nations (ASEAN), namely Indonesia, Singapore, the Philippines, and Malaysia, by employing statistical techniques and the Vector Autoregressive (VAR) approach. The empirical findings prove that the loan default ratio is the optimal credit guarantee ratio’s main determining factor. The empirical findings confirm that the credit guarantee ratio needs to be increased in the ASEAN region to help SMEs survive in the wake of the COVID-19 pandemic and for the post-COVID-19 economic recovery. The results show that the credit guarantee ratio should vary for different countries based on the macroeconomic climate and for each bank or, in other words, for groups of banks with similar financial soundness. The practical policy recommendations are establishing a regional credit guarantee scheme (RCGS) and evaluating banks’ soundness for setting the optimal credit guarantee ratio.
Full text:
Available
Collection:
Databases of international organizations
Database:
ScienceDirect
Type of study:
Prognostic study
Language:
English
Journal:
Economic Analysis and Policy
Year:
2022
Document Type:
Article
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