The change of supervision for Credit Guarantee Fund and its impact on SME’s lending

• Main Authors: Lin, Fang-ru, 林芳如
• Other Authors: Huang, Bor-yi
• Format: Others
• Language: zh-TW
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/26301155482654403507

碩士 === 實踐大學 === 財務金融學系碩士班 === 101 === In recent years, the development of the domestic financial and capital markets has diversified the sources of financing available to businesses. However, the weak structure of Taiwanese SME's, inadequate financial reporting, and information asymmetries means that financing options for SMEs continue to be limited, and as a result most SMEs continue to rely on banks for financing. Therefore, the willingness of banks to lend is central to the survival of SMEs. This paper explores the factors influencing bank financing for SMEs in Taiwan and the effect of placing the Small and Medium Enterprise Credit Guarantee Fund under the control of the Ministry of Economic Affairs. The paper discusses the effect on both the overall economy and individual banks. As annual economic information is insufficient to produce a large sample, we use the Ordinary Least Squares method with a bootstrap to investigate the effect of the overall economy on lending to SMEs. For individual banks, we use panel data together with instrumental variables. According to the research findings, large banks are the main source of lending to SMEs in Taiwan, but the level of funds underwritten by credit guarantee services and bank mergers and acquisitions do not necessarily increase the willingness of large banks to lend to SMEs. On the contrary, the guaranteeing of loans by the Credit Guarantee Fund has a positive impact on small and medium-sized banks. In addition, after the Credit Guarantee Fund was taken under the control of the Ministry of Economic Affairs, the ability of small banks to underwrite loans was increased. However, for the large banks, the influence of government-owned shares ensured that the policy increased the underwriting capacity of the banks, as the lending of large banks is influenced by different factors to small banks. On the other hand, increases in assets and total deposits of medium-sized banks enhanced the underwriting capacity. The empirical evidence suggests that the Credit Guarantee Fund does play a complementary role in bank lending to SMEs. However, the government should create more incentives to encourage large banks to increase lending to SMEs. In addition, after the Credit Guarantee Fund was taken under the control of the Ministry of Economic Affairs, small banks have become more willing to provide loans to SMEs. Furthermore, a series of new measures have been introduced to increase service efficiency, enhancing the capacity of the Credit Guarantee Fund to underwrite loans. For SMEs with the potential to develop, easier access to financing has enhanced sustainable business development, enabling them to make a greater contribution to the national economy.