Title Financing Small and Medium Enterprises in Myanmar Author(s ...

Figure 4 Regional/Community Funds for SMEs
Banks
Startup/Regional
SMEs
No funding
Trust Business
Risky Funding Stable Funding Establishment
Nonbank
Regional
Investor
Regional
Investor
Investment Fund:
Regional/community Fund
Regional
Investor
Regional
Investor
Source: Mamiko Yokoi Aria and Naoyuki Yoshino, Concept of Competitiveness in the
Financial Sector
The most sophisticated financing scheme for SME sector is securitization of SME
loans through capital market. It is now adopted in Japan and Singapore to some extent,
by combining credit guarantee scheme with sharing the risks arising from lending to
SMEs. Under this scheme, a loan to an SME is securitized to distribute the risk of the
original loan and attracting investors with a variety of risk appetite. The secondary
market development could greatly improve the liquidity of such securities and give
grater scope to SME loans as well 71 .
Japan has overcome the problem of banks’ unwillingness to give loans to SMEs by
providing credit guarantees in exchange for financial information from SMEs. The
Credit Guarantee Association (CGA) extends credit guarantees to SMEs that borrow
from banks. SMEs that receive such credit guarantees must submit their financial
information to the Credit Guarantee Association. Based on this information, the CGA
compiles the Credit Risk Information Database (CRD) which, in turn, can be used by
banks providing loans to SMEs 72 .
Though it is difficult to implement such extended financing programs in
71 Mamiko and Naoyuki, “Concept of Competitiveness in the Financial Sector” 2007. p. 24
72 Ibid., p. 25