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|Title: ||An evaluation of government-backed loan scheme in Malaysia|
|Authors: ||Shariff, Mohd Noor Mohd|
|Issue Date: ||2000|
|Publisher: ||© Mohd Noor Mohd Shariff|
|Abstract: ||SMEs are considered to be an engine for growth in both developed and developing
countries, by generating employment opportunities, strengthening industrial linkages,
securing home markets and earning valuable export revenue. Government-backed loan
schemes play a major role in many countries, by enabling small and medium-sized
enterprises (SMEs) to access credit facilities. The Credit Guarantee Corporation in
Malaysia has been charged with this key role in assisting SMEs, and its main financing
instrument is the New Principal Guarantee Scheme (NPGS).
The overall aim of this thesis is to examine the extent to which the NPGS is appropriate
to the financing needs of Malaysian SMEs. The primary objective is to identify the factors
that determine the utilisation of the NPGS; utilisation depends upon a number of demand
and supply factors, as well as the characteristics of firms and owner-managers (OMs). An
important secondary objective is to investigate the effectiveness of the NPGS, by
exploring the generation of finance and economic additionality, as well as the net cost of
the Scheme to the Treasury.
After a literature review, and the development of theoretical frameworks, a number of
hypotheses are put forward. The methodological approach combines a questionnaire
survey with case studies based on interviews with borrowers and financiers, and
interviews with key informants. The questionnaire is principally concerned with the
factors that affect the utilisation of the NPGS, whereas the case studies and interviews
focus on the three elements of effectiveness. The questionnaire data are derived from a
sample of firms from the CGC's database. The sample includes firms involved in a
variety of activities, from the manufacture of high-technology goods to the processing of
resource-based products. Firms were randomly selected to adequately represent racial
composition, legal structure and loan size within the CGC's portfolio. The questionnaire
data were supplemented by 15 in-depth case studies.
Two major findings emerge from this study. First, a number of independent variables did
have a significant relationship on the utilisation of the NPGS: the amount of security or
collateral; limited company status; manufacturing sector; size of firm; use of external
advisers for fund raising; and the existence of written business plans. However, the
majority of the hypotheses relating to the characteristics of OMs were rejected; the
researcher offers some explanations for this apparent anomaly. Second, the case studies
demonstrate that NPGS has achieved finance additionality comparable with achieved in
guarantee schemes elsewhere, as well as a significant degree of economic additionality.
The net cost of the Scheme was difficult to determine with any degree of precision.
On the basis of the research findings, the researcher is able to put forward a series of
recommendations to improve the operations of the CGC.|
|Description: ||A Doctoral Thesis. Submitted in partial fulfillment of the requirements for the award of Doctor of Philosophy of Loughborough University.|
|Appears in Collections:||PhD Theses (Business School)|
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