by Ilhyock Shim
In many Asian countries, government institutions have played an important role in guaranteeing SME loans. Nevertheless, they have also exhibited lacklustre operating profits in recent years. Two episodes of failures involving companies offering credit guarantees highlight the importance of sufficient capitalisation and prudent risk management, as well as the difficulty borrowers have in making a transition from credit guarantees.
JEL classification: G200, G220, G280.
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