Gaps in SME Financing: An Analytical Framework

Description of Images

Figure 1: Measures of SME Bank Lending Activity
This multiple line graph illustrates the number of customers (SME borrowers) and credit drawdown (in percentage) of SMEs from March 1996 to June 2001 (plotted on a quarterly basis). From March 1996 to June 2001, the number of customers rose steadily from approximately 660 000 to 800 000. In the same time frame, March 1996 to June 2001, the credit draw down of these customers in percentage declined steadily from just over 70% to approximately 65%.
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Table 4: Degrees of Creditworthiness According to Theories of Information Asymmetry
This table is a graphic depiction of the degrees of creditworthiness according to theories of information asymmetry. Three elements of creditworthiness are listed in a table: able to signal creditworthiness through collateral, has an established relationship with lender, and management of firm able to communicate creditworthiness. At the top left of the table is the header Less Information Asymmetry, and at the top right is the header More Information Asymmetry. The table itself is in various shades of grey, with the part of the table under Less Information Asymmetry being the lightest, and the part of the table under More Information Asymmetry the darkest. Four check marks are beside each element at various points on the table, depending on the degree of creditworthiness.
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Figure 2: US Venture Capital Activity Since 1994
This figure illustrates US Venture Capital Activity by total invested in billions of dollars, and average deal size in millions of dollars, from 1994 to 2001. All numbers are approximate. In 1994, the total dollars invested in VC was $4 billion, and the average deal size was $2.5 million. In 1995, the total invested was $5 billion, and the average deal size was $3 million. In 1996 the total invested was $10 billion, and the average deal size was $5 million. In 1997, the total invested was $12 billion, and the average deal size was $4 million. In 1998, the total invested was $16 billion, and the average deal size was $6 million. In 1999, the total invested was $35 billion, and the average deal size was $7.5 million. In 2000, the total invested was $89 billion, and the average deal size was $15 million. In 2001, the total invested was $19 billion, and the average deal size was $11 million.
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Figure 3: Historical Patterns of IPO Issuances and Initial-Day Returns
This combination graph illustrates the number of IPOs issued in the US annually from 1960 to 2000, and demonstrates the cyclical nature of the market for IPOs. The number of IPOs per year is illustrated with a vertical bar graph, and the average initial-day return is illustrated with a line graph. In 1960, the number of IPOs was approximately 260 and the average initial-day return was approximately 18. In 2000, the approximate number of IPOs was 400, and the average initial-day return was approximately 56. In the intervening years there was much up and down activity in the market, with the number of IPOs peaking in 1986 at approximately 950, and the average initial-day return peaking in 1999 at approximately 70. There were a number of "hot markets," throughout this 40-year span.
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Gap Analysis: Applications
This graphic illustrates the framework approach for testing of credit gaps. The graphic is composed of three boxes connected to each other by a line. The first box contains the determinants of credit outcomes, such as the size of firm, efficiency of firm, owner(s) skills and experience. The second box contains the rationing criterion, or type of hypothesized gap, such as knowledge, size, gender, etc. The final box contains the credit outcome, such as loan approval or turndown, terms of credit, and documentation and guarantee requirements.