D&B Australia has published a whitepaper which examines the challenge of information asymmetries in small business credit. In particular it:
- Identifies the unique characteristics of a small business and provides a workable definition;
- Examines how information asymmetries for small business can be reduced;
- Reveals an untapped credit market of more than one million small businesses in Australia and provides an overview of their risk profile.
Access to credit for small business is constrained by a number of factors including the ability of lenders to access wholesale funds, prudential requirements and government regulation. However, even in markets where these factors are benign the flow of credit to small and medium size enterprises (SMEs) remains a challenge.
This signals that the problem is more than just one of supply. The inability of many credit providers to adequately assess and price risk is as great a problem as the size of the lending pool. At the heart of this challenge are information asymmetries.
Bridging the gap in information between lenders and borrowers is essential to improving the flow of credit to small business. To find the answers please read the D&B Australia White Paper: DnB_Small Business Credit Whitepaper