Mitigating Small Business Finance Risks

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I investigated and modeled the credit guarantee scheme using econometric techniques and calculated the optimal credit guarantee ratio for each group of banks in a sample of countries from the Association of Southeast Asian Nations (ASEAN) in different stages of recovery in post-COVID-19. In addition, I expanded my study by incorporating the carbon neutrality and green development goals and the necessity of green finance and investment to achieve the goals in Japan, China, ASEAN, and several other countries in Asia.In my studies, firstly, I examined the relationship between the credit guarantee ratio and different variables. Secondly, I developed an econometrics model to highlight the loan default ratio response to macroeconomic and bank-level impulses; thirdly, my studies proposed ways to make the recovery of SMEs, green and sustainable; fourthly, I evaluated the effectiveness of green finance instruments, including carbon taxation, carbon pricing, green bond, green credit guarantee, green credit to promote the green growth of all sectors including SMEs.I found that the green credit guarantee scheme is a proper instrument for facilitating the development of SMEs while incentivizing them to be green. Moreover, SMEs are significant emitters; hence carbon neutrality could not be achieved without considering the SMEs. In addition to that, to have an optimal credit guarantee scheme, the guarantee fee needs to vary for SMEs based on their soundness. Moreover, governments need to categorize banks based on their soundness, and sound banks receive a higher guarantee ratio.