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Presentation by Matt Gamser, International Committee on Credit Reporting, March 2013
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Key Constraints on SMEs
Matt GamserHead, SME Finance Forum
International Committee on Credit ReportingRome, March 2013
SME Finance Forum Mission
Promote and disseminate global knowledge and good practices in SME finance to accelerate financial inclusion for SMEs
Achievements to date
News/reports on SME finance with daily feeds
Growing LinkedIn group: over 1200 members
Promotion of innovative approaches to promote SME finance/SME Finance Challenge
Data sharing/harmonization Policy dialogue (G20/AFI) Impact analysis Women’s Finance Hub coming
soon!
Our TeamMatthew Gamser, [email protected]
Hourn Thy, Operations & Technical [email protected]
Nadia Afrin, KM & Web [email protected]
Minerva Kotei, Women’s Finance [email protected]
Nothando Nyathi, [email protected]
Support for the SME Finance Forum:
Support for the G20 Finance Innovation Fund provided by:
Donors
SMEs provide 2/3 of formal jobs in the private sector in emerging markets
SMEs consider access to finance and power as the leading constraints
Formal SME credit gap remains as large as ever at ~ $ 1 Trillion
Today 55-68% of formal SMEs in emerging markets are either unserved or underserved
82-86% (~ 0.8-0.9 Tn) of total credit gap of formal SMEs in emerging markets is represented by formal SMEs that already have a deposit account
Worldwide majority of woman-owned formal SMEs are unserved or under-served
But financial institutions face 6 main challenges when lending to SMEs
….. And banks need capacity to address these challenges
Global Trends: Shifting the Financial Inclusion Frontier Forward
Financial infrastructure is a critical building block for SME financial inclusion
Credit reporting systems
reduce information asymmetries, support
efficient credit allocation and strengthen risk management
Payment and settlement systems facilitate access to
financial services and the safe transfer of
funds. PS can mitigate financial crises by
reducing settlement risks
Secured transactions systems and
collateral registries reduce risk to
lenders, facilitate access to credit, and
promote credit diversification
A solid Financial
Infrastructure serves both
Inclusion and Stability
Impact of improved credit reporting on financial inclusion
Source: Love & Mylenko (2003)
Full information-sharing increases access to credit
¨Out of every 100,000
loan applications
11,400 are lost if
assessment is based
on negative info only¨
% increase in lending volumes
73.7
83.2
Negative information only
Negative and positiveinformation
Source: Barron and Staten (2000). Note: Figure shows the simulated acceptance rate assuming a default rate of 4% overall
Myths and Opportunities #1
Myths and Opportunities #2
Myths and Opportunities # 3
And maybe all of us?
MSME and Payments
• More electronic transactions lower information costs• More electronic transactions save time and money for firms• More electronic transactions offer alternative portfolio
management options
Issues:• Payments data availability• Movable assets/secured transactions rights/regulations• Inter-operability• Financial institution capacity/awareness
On the Web at www.smefinanceforum.org
LinkedIn Group: SME Finance Forum
Twitter: @SMEFinanceForum
