Some countries in Asia Pacific posted stronger growth in bank lending to small businesses between 2019 and 2021 as compared to the period from 2017 to 2019
May 10, 2022 | Wendy WengOverall, the banking sector registered stronger growth in small business lending in the last two years. Governments have implemented various policies to encourage more credit supply for small businesses that play a pivotal role in economic growth and employment creation. The weighted average of growth in banks’ small business lending in the eight Asia Pacific markets, namely Australia, China, India, Indonesia, Malaysia, South Korea, Taiwan, and Thailand, stood at 15.4% in 2021.
Among these markets, China posted the strongest growth in bank loans to small businesses between 2017 and 2021, at a compound annual growth rate (CAGR) of 12.9%, followed by Taiwan at 9.3%, and South Korea at 8.9%. The share of lending to small businesses to total bank lending increased in China, Indonesia, South Korea and Taiwan, while Australia, India and Malaysia saw a drop in the share of small business loans.
China recorded the strongest growth in bank lending to small businesses
China, Taiwan and South Korea witnessed double-digit annual growth in bank lending to small businesses over the past two years. China registered a CAGR of 16.4% in banking institutions’ lending to micro and small enterprises (MSEs) during the period from 2019 to 2021, stronger than the 9.6% recorded between 2017 and 2019. Banks’ MSE loans as a share of total bank loans went up to 24.5% in 2020 and 25.7% in 2021, following the decline from 25.2% in 2017 to 23.9% in 2019. Loans to small and medium enterprises (SMEs) in Taiwan increased by a CAGR of 6.4% from 2017 to 2019 and 12.3% from 2019 to 2021, reaching $316 billion at the end of 2021. The share of banks’ SME loans in total bank loans in Taiwan increased gradually from 21.6% in 2017 to 24.9% in 2021.
The outstanding MSE lending across the Chinese banking sector totalled $7.8 trillion in 2021. Inclusive MSE loans with a single bank’s credit line to the qualified borrower not exceeding $1.6 million (...
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