2. Session 1 Arzeni OECD PPT
Transcript of 2. Session 1 Arzeni OECD PPT
-
7/28/2019 2. Session 1 Arzeni OECD PPT
1/10
ADB-OECD Workshop on Enhancing
Financial Accessibility for SMEs
2013/3/6 Session 1
1
Emerging Trends in SME and Entrepreneurship Finance:
Findings from the OECD Scoreboard
ADB - OECD Workshop on
Enhancing Financial Accessibility for SMEs
Manila, 6 7 March 2013
Mr Sergio ArzeniDirector of the OECD Centre for SMEs, Entrepreneurship & Local Development(CFE)
Overview
1. The SME Financing Gap
2. The monitoring challenge
3. OECD Scoreboard on SME andEntrepreneurship Finance: emerging trends
4. The impact of financial reforms
5. Government policies to support SME access tofinance
6. Key challenges ahead
-
7/28/2019 2. Session 1 Arzeni OECD PPT
2/10
ADB-OECD Workshop on Enhancing
Financial Accessibility for SMEs
2013/3/6 Session 1
2
The SME Financing Gap
Financial deepening varies largely across regions
but access to finance is a common challenge for SMEso Debt financing limited by under-collateralisation
o Little access to venture and growth capitalo Cash flow shortages from late payments
exacerbated by the global crisis
Firms with line of credit from financial institution (%)
Source: IFC
Domestic credit to private sector (% GDP), 2011
Source: WB
SME Financing: the monitoring challenge
Policy makers and major stakeholders (e.g. financialinstitutions) lack the hard data necessary to:
Monitor SME financing trends and needs
Evaluate SME financing policies and programmes
Knowledge gap on:
- Supply of financeby (various) financial institutions
- Demand and use of financing by SMEs
- capital structure and destination of funding
- Effectiveness of government policies directly andindirectly affecting SME access to finance
-
7/28/2019 2. Session 1 Arzeni OECD PPT
3/10
ADB-OECD Workshop on Enhancing
Financial Accessibility for SMEs
2013/3/6 Session 1
3
OECD Scoreboard on SME and Entrepreneurship Finance
o Launched in 2012 by the OECD Working Party on SMEsand Entrepreneurship (WPSMEE), the official OECD body
helping member and non-member economies develop policiesthat:
Foster entrepreneurship
Facilitate sustainable growth, competitiveness, and skilled jobscreation, and
Help their SMEs to meet the challenge of globalisation.
o Contributing to the G20 Global Partnership for FinancialInclusion
OECD Scoreboard on SME and Entrepreneurship Finance
Objectives :
1. Provide a tool for policy makers to monitor SME access tofinance in a timely manner andjudge policy effectiveness
2.Highlight important economic and policydevelopments in SME finance
3.Identify and exchange on a regular basis good policy andpractices
4.Guide governments to assemble meaningful indicatorsand favour harmonization of definitions and datacollection methods
Tool for policy learningto become an international reference
-
7/28/2019 2. Session 1 Arzeni OECD PPT
4/10
ADB-OECD Workshop on Enhancing
Financial Accessibility for SMEs
2013/3/6 Session 1
4
OECD Scoreboard on SME and Entrepreneurship Finance
13 core indicators of debt, equity and frameworkconditions, 25 countries over 2007-2011
allocation of credit by size of firm
structure of SME debt (short vs long term)
unmet demand for credit by SMEs
conditions for SMEs access to credit (i.e., interest rates, collateralrequirements) relative to large firms
role that venture and growth capital play in SME financing
incidence of other cash flow constraints, such as payment delays
bankruptcy rates
Recent trends in SME finance: the Scoreboard evidence
Trends in SME loans, 2007-2011
Expanding Stagnating or contracting
-
7/28/2019 2. Session 1 Arzeni OECD PPT
5/10
ADB-OECD Workshop on Enhancing
Financial Accessibility for SMEs
2013/3/6 Session 1
5
SME finance at crisis time
In many OECD countries, SMEs squeezed by: Drop in demand
Tougher credit conditions (shortened maturities,increases interest spreads, higher demand for collaterals)
Increased payment delaysby large firms and publicadministration
severeworking capital problems
Financing difficulties translated into solvencyproblems
Increases in non-performing loans
Surge in bankruptcy rates
Business and SME loans declined markedly
Lending to firms in Italy, 2005-2012Monthly data, 12 month percentage changes
Note: SME interest rates for loans less than EUR 1 million
Source: Financing SMEs and Entrepreneurs 2013 : An OECD Scoreboard
-8.0
-4.0
0.0
4.0
8.0
12.0
16.0
Small firms (less than 20 employees)Medium and large firms (at least 20 employees)
-
7/28/2019 2. Session 1 Arzeni OECD PPT
6/10
ADB-OECD Workshop on Enhancing
Financial Accessibility for SMEs
2013/3/6 Session 1
6
SMEs were more severly affected through the
uncertain recovery
KoreaQuarterly, in KRW millions (left) and as a % of total business loans (right)
Source: Financing SMEs and Entrepreneurs 2013 : An OECD Scoreboard
SMEs faced more severe credit conditions
Denmark France
Interest rates for SMEs and interest rate spread, 2007-11Annual, as a percentage
Note: SME interest rates for loans less than EUR 1 million
Source: Financing SMEs and Entrepreneurs 2013 : An OECD Scoreboard
1.121.39
2.893.19
3.43
0
1
2
3
4
5
6
7
8
2007 2008 2009 2010 2011
I nter est r ate spr ead I nter est r ate, S ME s
-
7/28/2019 2. Session 1 Arzeni OECD PPT
7/10
ADB-OECD Workshop on Enhancing
Financial Accessibility for SMEs
2013/3/6 Session 1
7
and increased collateral requirements
Canada% of Small businesses required and not required to provide collateral
Thailand
Value of collateral provided by SMEsAs a percentage of total SME business loans
Source: Financing SMEs and Entrepreneurs 2013 : An OECD Scoreboard
Increased solvency problems and bankruptcy rates
Trends in Bankruptcies, 2007-11Annual, 2007 = 1.00
Source: Financing SMEs and Entrepreneurs 2013 : An OECD Scoreboard
* SMEs only
-
7/28/2019 2. Session 1 Arzeni OECD PPT
8/10
ADB-OECD Workshop on Enhancing
Financial Accessibility for SMEs
2013/3/6 Session 1
8
Venture and growth capital declined
late modest recovery
Venture and growth capital invested, 2007-11Annual, in EUR million and USD billion
Denmark USA
Source: Financing SMEs and Entrepreneurs 2013 : An OECD Scoreboard
3230
20
23
30
25
19
910
11
0
5
10
15
20
25
30
35
2007 2008 2009 2010 2011
Venture capital Business angels
The impact of financial reforms
Basel III
Avoid future financial crises by increasing banks capitalrequirements and improving liquidity management.
Concerns that Basel III may result in restricted access tofinance for SMEs in the short-medium term, due to highrisk-weightings and rapid deleveraging by banks
January 2013: easing of rules to spur credit
Need to closely monitor the effects of the Basel IIIimplementation to ensure that stability does not put anundue break on business finance
-
7/28/2019 2. Session 1 Arzeni OECD PPT
9/10
ADB-OECD Workshop on Enhancing
Financial Accessibility for SMEs
2013/3/6 Session 1
9
Response to the crisis: restore credit to SMEs Significant increase in scale and scope of existing guarantee anddirect lending programs
Implementation of new programmes to overcome informationasymmetry (e.g. credit mediation schemes, business advice)
Following liquidity shortages, measures to support workingcapital (reduction of payment delays, tax payment deferral)
Post-crisis policies: restore growth under
stringent public budget constraints Credit guarantee programs continued
Codes of conduct and lending targets for banks
Financing for growth (e.g guarantees to equity, mezzaninefinance)
Government policies to support SME finance
Key role of Public Financial Institutions
Market channels and Public-Private Partnership
Restoring growth and employment
Strengthening SMEs and reviving entrepreneurialdynamics
Boosting innovative entrepreneurship and addressing
the growth capital gap Fostering social inclusion and poverty reduction through
the SME sector
Improving the policy process
Design and implement effective policies under tightbudget constraints: leveraging resources
Improve instruments to monitor and assess policies
Diffuse best practices and sustain policy learning
Key challenges ahead
-
7/28/2019 2. Session 1 Arzeni OECD PPT
10/10
ADB-OECD Workshop on Enhancing
Financial Accessibility for SMEs
2013/3/6 Session 1
THANK YOU
OECD CENTRE FOR ENTREPRENEURSHIP, SMEs &
LOCAL DEVELOPMENT(CFE)www.oecd.org/cfe