SME Financing to Promote Innovation in Korea Soon-Yeong Hong

Suggestions for Revitalization of Technology Financing First is revitalizing M&A to expand the financial market for private technology. It expands the inflow of private investment. Second is the creation and operation of a new technology investment fund. This will address market failure and stimulate private investment in technology. Third is easing the requirements to list the Inno-biz on the KOSDAQ. Venture companies among the innovative SMEs receive benefits when listed on the KOSDAQ. But it is not easy to push listing for Inno-biz because of the listing regulations.

Alternative Proposals for Promoting SMEs Financing 1) Policies for Promoting Korean innovative SME Financing First is activating the investments of venture capital funds to innovative SMEs in the early stage. Second is activating bank loans to SMEs in the growth stage. Third is activating regional SMEs financing by rearing regional financial institutions. Fourth is activating the investments of private equity funds to innovative SMEs. Fifth is activating SMEs financing from abroad.

2) Policies for Promoting Asian SME Financing First is establishing a credit bureau specialized in SMEs in each Asian country and sharing credit information about SMEs. Second is establishing an international organization that collects information about innovative SMEs in Asia and provides information to the investors and the financial institutions in Asian countries. Third is enhancing the transparency of SMEs by introducing the accounting system of international standard in each country of Asia. Fourth is establishing a common Asian credit guarantee institution which can reduce the risks of investments and loans to innovative SMEs.