Challenges in Implementing the Credit Guarantee Scheme for Small and Medium-Sized Enterprises: The Case of Viet Nam

30 Pages Posted: 16 Oct 2019

See all articles by Le Ngoc Dang

Le Ngoc Dang

Academy of Finance - International Finance Department

Anh Tu Chuc

Academy of Finance

Date Written: April 8, 2019

Abstract

Access to credit is still one of the greatest obstacles to the growth of small and medium-sized enterprises (SMEs) in Viet Nam. To date, only 39% of SMEs have bank loans. To cater to SMEs’ need for financial sources, especially formal sources such as the banking system, the Vietnamese government has implemented a large number of supporting programs, including the credit guarantee scheme (CGS) for SMEs, which it established in 2001. Through collecting, synthesizing, and analyzing data, we aim to study the challenges involved in implementing CGSs for SMEs as well as the causes of their poor performance. The fundamental reasons we find include the strict and impractical conditions for issuing credit guaranteed loans; the lack of adequate professional competence of staff involved in the credit guaranteeing task; the fragmented relationship between the credit institution and the CGS; and the lack of a credit database platform that facilitates access to finance for SMEs by providing comprehensive and reliable creditworthiness.

Keywords: credit for SMEs, Vietnamese business environment, SMEs in Viet Nam

JEL Classification: G28, G23, E51, H81

Suggested Citation

Dang, Le Ngoc and Chuc, Anh Tu, Challenges in Implementing the Credit Guarantee Scheme for Small and Medium-Sized Enterprises: The Case of Viet Nam (April 8, 2019). ADBI Working Paper 941, April 2019. Available at SSRN: https://ssrn.com/abstract=3470044 or http://dx.doi.org/10.2139/ssrn.3470044

Le Ngoc Dang (Contact Author)

Academy of Finance - International Finance Department ( email )

Ha Noi
Vietnam

Anh Tu Chuc

Academy of Finance

8 Phan Huy Chu
Phan Chu Trinh Street
Hanoi
Vietnam

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