Capital Market Financing for SMEs: A Growing Need in Emerging Asia

This paper explores the potential of capital market financing for SMEs in emerging Asia. It reviews the challenges faced by existing SME capital markets and assesses demands of SMEs, regulators, policy makers, market organizers, securities firms, and investors for developing an SME market. Given the responses to the national growth strategies and the cross-cutting issues of global policy agendas, the paper explores the potential for developing the exercise equity market and the social capital market in the region. It covers the following sections in detail:

• Landscape of SME capital markets in Asia with a focus on types of SME capital markets, SME equity markets, SME bond markets, and the existing regulatory structure;
• Supply side analysis including policy stance, recommended policy actions, performance of SME capital markets, product types and market modality, and critical factors required to create capital markets;
• Demand side analysis including funding instruments, barriers to accessing financial institutions, and willingness to access SME capital markets;
• New modalities of SME capital markets with a focus on exploring two types of specialized market infrastructure: exercise equity markets and social capital markets.