Financial intermediaries
Financial intermediaries, particularly banks, are the most important source of external funds used to finance businesses (slide 9-chapter 7)
Introduction:
Financial intermediaries, particularly banks are a major source of finance for all businesses, providing finance for starting up, running the business and for expansion.
Banks in Vietnam have the most important role in financing business activities.
However, it is difficult task for small and medium-sized enterprises in Vietnam to get access to financial support from banks.
Case in Vietnam: Small and medium enterprises in Vietnam seek financial support from banks.
SMEs in Vietnam:
-SMEs are defined as enterprises having 299 or fewer employees.
- accounted for 95–97% of the total resisted enterprises in Vietnam and employed more than 50% of the labor force in the business sector.
-They also produce 40-50% of the consumer goods exported by the country in 2010.
=> The success of the economies in the region marks significant contribution of Small & Medium Enterprises (SMEs) in creating jobs, increasing income for workers, increasing economic development and mobilizing social resources in the investment process. In addition, SME is also considered an indicator of new economic policies’ impact on business community.
Situation: SMEs employ mostly short-term liabilities to finance their operations
- Difficult task for the enterprises to mobilize capital from the market through stocks, shares, and bonds, as most of them were not qualified to be listed on the stock exchange
- Joint mobilized capitals were rare among the businesses due to the high interest rate, while the possibility of using external loans, such as ODA, was still limited
=> Most SMEs had to depend on bank loans, which accounted for 80-90 per cent of their capital
However, most of the bank loans provided were short term and SMEs had to go through complicated procedures in order to access the loans
- In 2004, about 20% of the loans came from banks and
Introduction:
Financial intermediaries, particularly banks are a major source of finance for all businesses, providing finance for starting up, running the business and for expansion.
Banks in Vietnam have the most important role in financing business activities.
However, it is difficult task for small and medium-sized enterprises in Vietnam to get access to financial support from banks.
Case in Vietnam: Small and medium enterprises in Vietnam seek financial support from banks.
SMEs in Vietnam:
-SMEs are defined as enterprises having 299 or fewer employees.
- accounted for 95–97% of the total resisted enterprises in Vietnam and employed more than 50% of the labor force in the business sector.
-They also produce 40-50% of the consumer goods exported by the country in 2010.
=> The success of the economies in the region marks significant contribution of Small & Medium Enterprises (SMEs) in creating jobs, increasing income for workers, increasing economic development and mobilizing social resources in the investment process. In addition, SME is also considered an indicator of new economic policies’ impact on business community.
Situation: SMEs employ mostly short-term liabilities to finance their operations
- Difficult task for the enterprises to mobilize capital from the market through stocks, shares, and bonds, as most of them were not qualified to be listed on the stock exchange
- Joint mobilized capitals were rare among the businesses due to the high interest rate, while the possibility of using external loans, such as ODA, was still limited
=> Most SMEs had to depend on bank loans, which accounted for 80-90 per cent of their capital
However, most of the bank loans provided were short term and SMEs had to go through complicated procedures in order to access the loans
- In 2004, about 20% of the loans came from banks and