ABSTRACT
This chapter focuses on issues of small- and medium-sized enterprises (SME) financing in selected Asian economies emphasizing external sources of finance. It reviews an empirical analysis focusing upon the importance of SME characteristics in accessing finance from formal financial institutions for the case of eight countries in Asia. A key aim is to identify the existence of credit rationing and whether small firms are at a disadvantage in acquiring finance, if the terms of the finance are more restrictive and whether small firms face higher costs of borrowing. Domestic-based owners running multiple businesses and operating in more developed economies, are inclined to seek external finance and from more diverse sources. Access to external sources of finance for SMEs operating in all three industrial sectors considered as quite variable. The possession of collateral is beneficial for an SME when it wishes to obtain longer-term finance while the preparation of financial statements assists SMEs in attaining larger loans.
