Role of the Credit Risk Database in Developing SMEs in Japan: Lessons for the Rest of Asia

25 Pages Posted: 20 Nov 2015

See all articles by Satoshi Kuwahara

Satoshi Kuwahara

CRD Credit Risk Database

Naoyuki Yoshino

Asian Development Bank Institute

Megumi Sagara

CRD Credit Risk Database

Farhad Taghizadeh Hesary

Waseda University

Date Written: November 18, 2015

Abstract

Small and medium-sized enterprises (SMEs) play a significant role in Asian economies as they contribute to high shares of employment and output. However, SMEs generally have limited access to finance compared to large enterprises. Given the bank-dominated financial systems in Asia, banks are the main source of financing for SMEs. For financial institutions, it is crucial to distinguish sound SMEs from non-healthy ones in order to avoid the accumulation of non-performing loans. Information asymmetry in this sector can be reduced by using accumulated data on SMEs and by employing credit analysis techniques, allowing lending institutions to recognize healthy SMEs. It is crucial for governments to collect SME data and prepare rich databases, such as the Credit Risk Database (CRD) of Japan. This will also help governments to formulate economic policies. In this paper we define and describe in detail the role and characteristics of Japan’s CRD in SME development and explain how it can be an example for other Asian economies to establish similar soft infrastructure that can make important contributions to SME development and boost economic growth.

Keywords: SME finance, Credit Risk Database, risk models

JEL Classification: G21, G24, G32

Suggested Citation

Kuwahara, Satoshi and Yoshino, Naoyuki and Sagara, Megumi and Taghizadeh Hesary, Farhad, Role of the Credit Risk Database in Developing SMEs in Japan: Lessons for the Rest of Asia (November 18, 2015). ADBI Working Paper 547. Available at SSRN: https://ssrn.com/abstract=2692549 or http://dx.doi.org/10.2139/ssrn.2692549

Satoshi Kuwahara (Contact Author)

CRD Credit Risk Database ( email )

Japan

Naoyuki Yoshino

Asian Development Bank Institute ( email )

Kasumigaseki Building 8F
3-2-5, Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

Megumi Sagara

CRD Credit Risk Database ( email )

Japan

Farhad Taghizadeh Hesary

Waseda University ( email )

1-6-1 Nishi-Waseda,
Shinjuku, Tokyo 169-8050
Japan

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