 |
Bank Financing for SMEs Inadequate in Hong Kong: Survey
There is a gap between the demand for bank credit by small and medium enterprises (SME) and the supply of funds by banks, as availability of bank financing is considered inadequate, a recent survey showed.
The survey released by the Hong Kong Monetary Authority Friday showed that SMEs in Hong Kong have difficulties to get adequate bank financing in the aftermath of the Asian financial crisis.
"This is evidenced by their heavy reliance on personal savings as the major funding source for starting up and expanding business, " according to the survey.
The SMEs surveyed found that banks generally adopt conservative lending policies and rely mainly on the availability of collateral.
The fall in property prices during the Asian financial crisis made it difficult for these companies to obtain bank finance.
In line with the views expressed by SMEs regarding banks' credit policies, the banks interviewed acknowledged that they had adopted a more conservative lending stance toward SMEs than toward large companies because of a number of unfavorable characteristics of the loan market.
Banks and SME associations appeared to be somewhat more optimistic during the March survey about the short-term prospects for an increase in bank credit than were the companies represented in the survey carried out in late 1999.
The difference may mark some turnaround in the financing situation of SMEs as time passed, although the different composition of the samples may also have had an effect.
It is encouraging to note that banks interviewed in the March survey indicated a neutral to positive attitude in their future lending stance.
Some banks revealed that they were aware of the difficulties faced by SMEs and had already taken active steps to improve services to them. They had either started increasing their lending to SMEs since last year or set up dedicated business units focusing on the SME loan market.
In This Section
|