Factors Affecting Micro, Small, and Medium-Sized Enterprise Development in Developing Asia: Findings from a Probabilistic Principal Component Analysis

46 Pages Posted: 14 Feb 2024

See all articles by Shigehiro Shinozaki

Shigehiro Shinozaki

Asian Development Bank Institute

Daisuke Miyakawa

Waseda University

Romeo Arahan

Asian Development Bank

Date Written: February 14, 2024

Abstract

Limited data on micro, small, and medium-sized enterprises (MSMEs) make it difficult for governments to design appropriate MSME policies in Asia and the Pacific. To identify factors affecting MSME development and promote evidence-based policymaking, we propose a probabilistic principal component analysis method that works despite current data limitations. The study uses time-series MSME data collected from 25 developing member countries of the Asian Development Bank (ADB) through the Asia Small and Medium-Sized Enterprise Monitor project. The estimation results suggest that sound MSME credit markets, diversified financing options, support for new businesses and job creation, and active MSME participation in global marketplaces play a critical role in ensuring a smooth business recovery from various crises and shocks affecting developing Asia and the Pacific.

Keywords: SME development, access to finance, financial inclusion, SME policy, probabilistic principal component analysis, Southeast Asia, South Asia, Central and West Asia, the Pacific

JEL Classification: D22, G20, L20, L50

Suggested Citation

Shinozaki, Shigehiro and Miyakawa, Daisuke and Arahan, Romeo, Factors Affecting Micro, Small, and Medium-Sized Enterprise Development in Developing Asia: Findings from a Probabilistic Principal Component Analysis (February 14, 2024). Asian Development Bank Economics Working Paper Series No. 715, Available at SSRN: https://ssrn.com/abstract=4725784 or http://dx.doi.org/10.2139/ssrn.4725784

Shigehiro Shinozaki (Contact Author)

Asian Development Bank Institute ( email )

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

Daisuke Miyakawa

Waseda University ( email )

1-104 Totsukamachi, Shinjuku-ku
tokyo, 169-8050
Japan

Romeo Arahan

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
111
Abstract Views
390
Rank
517,890
PlumX Metrics