Mid-sized and small businesses often have few resources with an unsteady foundation. Therefore, they tend to encounter more risks and challenges in operation and management, relative to large corporations. As a result, most countries have policies to help the development of mid-sized and small businesses. One of them is the credit guarantee system, providing these businesses one of the basic financing mechanisms. The credit guarantee system in Taiwan is still immature. This study examines credit guarantee systems across countries. First, it summarizes the characteristics of various credit guarantee organizations, their funding sources, their cooperative relationship with banks, the strategies in controlling risks, and the operating mechanisms. Next, it compares the weaknesses and advantages between the guarantee system in Taiwan and other countries. Finally, based on the experience of other countries, it provides suggestions for improving the system in Taiwan, and hopes to enhance its functions in order to provide better and more efficient financing services for the mid-sized and small businesses.

Thesis advisor: Richard McGowan / Subsidies have played a significant role in the production of agriculture during the 20 century. While the western world gradually phased out protectionist policies for industrialized sectors of the economy following World War II, agriculture continued to receive significant support from the state until efforts were made to establish more laissez-faire markets in the 1990’s by the World Trade Organization. This paper aims to judge the effectiveness of these policies on one program in particular: export credit guarantees. By examining the effects of credit guarantees on US wheat exports through panel data regressions, this paper hopes to provide evidence of the effectiveness of recent policy in creating egalitarian and free markets for agricultural commodities. / Thesis (BA) — Boston College, 2011. / Submitted to: Boston College. College of Arts and Sciences. / Discipline: Economics Honors Program. / Discipline: Economics.

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In recent years, Small and Medium Enterprise Credit Guarantee Fund(SMEG) has been actively promoting organization restructuring, boosted its business unceasingly, and impelled each innovation guarantee service actively, in order to display the best benefit. This paper combines C. J. Kuo.¡]2003¡^market-based risk neutral model with actuarial valuation principles, using above observable rate discrepancy¡]i.e. one for that guaranteed by SMEG, and the other for non-guaranteed portion¡^to evaluate the credit risk SMEG assumed from guaranteed schemes, then derives the optimal guaranty fees model. The major research finding shows fixed as follows conclusion: 1.The real prepayment in subrogation is close to the total guaranty fees estimated by proposed model. 2.Applying this model can help that the credit risk degree SMEG takes reacts to the guarantee premium, and that SMEG control risk balance revenue and expenditure. This indicates that the model can reflect market information, and thus is easily applicable and referable by SMEG to establish the structure of guaranty fees as well as to reach an integrated risk management.

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Small and Medium Enterprises (SMEs) in Taiwan play an important role in the economic system, but compared to other listed or larger companies, SMEs are more difficult in obtaining fund, and this is the reason why Small and Medium Enterprises Credit Guarantee Fund (SME Credit Guarantee Fund) sets up. The purpose of this study is to discuss the guaranteed risk of the SME Credit Guarantee Fund, including the estimate of the ex-ante probability of default and the hypothesis test of the ex-post recovery rate. The sample data, which are divided into twenty three industries, are established for the estimation of the market value for all kinds of industries, using the Moody's KMV Private Firm Model as the basic theory to estimate the company¡¦s probability of default and revising the default point to fit the features among different economic periods in Taiwan. This research uses the Chi-square homogeneity test to test how characteristic variables of companies affect the recovery rate. The study finds that the default point of the original definition of KMV may underestimate SME¡¦s probability of default in Taiwan, and there is lower estimated probability of default at good times rather than that at bad times. The recovery rate shows a right-skewed distribution, and the results also indicate that the how many banks the companies transact with, whether the directors and supervisors of the companies are joint and several guarantee, how old the companies are and how long the responsible officers are in business, have significantly affected the recovery rate.

Mongolian SME sector is an important part of its private sector that effectively contributes to the outcome of Mongolian economy. Like SMEs in other countries, SMEs in Mongolia face challenge of accessing to finance and this is the most constraint for their continuous growth. While credit guarantee schemes, by filling this gap, became one of the most effective SME promoting tools for the governments of many developed and developing countries, Mongolian government has not been institutionalizing such schemes yet. This study investigates the feasibility of Mongolian government to establish a state-funded CGS in order to facilitate SMEs access to finance. This research based on questionnaire survey conducted from 316 SMEs in urban and rural areas of Mongolia in late 2011. SMEs need for financing, demand for guarantee services and their attitude toward establishing the CGS in Mongolia were investigated. Also, two officials from ¡§SME Fund¡¨ and ¡§SME Support Agency¡¨ were interviewed to analyze their attitude on feasibility of institutionalizing the CGS with the support of Mongolian government. The study showed that there is a high demand for additional financing and credit guarantees in SME sector. The findings suggested that the government urgently needs to institutionalize CGS to solve financial challenges of SMEs. As the most appropriate type of CGSs for Mongolian environment found was a ¡§Public CGS¡¨.

SME Credit Guarantee Fund established for the express purpose is to supply SME credit guarantee with the potential for development but lack the Collateral. It was financial institutions and credit financing. This study was based on a combination of market-based risk neutral evaluation model and insurance actuarial Principle assess the SME Credit Guarantee Fund to ensure that the current main business of insurance rates, According to the estimate and to the SME Credit Guarantee Fund and commercial banks to be charged with considerable risk of price compensation. In the management of business credit guarantees default risk. Bank of samples by the empirical results show that under this model receivable procedures for estimating costs, and the total amount of compensation rather, past a single 0.75% guaranteed rates significantly undervalued, with a single rate is the inverse effect of choice, nearly half over the industry higher than the current guarantee fee from the top 1.5%. If a word, which is the standard fees, fear is still not allow the fund to two-profit and loss. The model is a simple response to both the characteristics of market information, for the SME Credit Guarantee Fund in the risk management and pricing rates to be on the reference. Keywords:SME Credit Guarantee Fund. Credit risk. Risk management. Insurance Actuarial Model

Abstract Small and medium-size enterprises (SMEs) are the engine of economic deve- lopment, but market imperfections such as those caused by underdeveloped fi- nancial and legal systems impede their growth. Although SMEs form a large part of private sector in many countries, they face larger growth constraints and are less likely to have access to formal sources of external finance than large firms. SMEs have the characteristics of informational opacity, weak finance, imperfect management and small size. These characteristics bring about moral hazard and adverse election, implying high credit risk of SMEs. Lending technologies can help facilitate SMEs¡¦ access to finance. The credit supplementation institutions have significant effects on SMEs credit availa- bility, so it becomes an important issue to policy makers around the globe setting up relevant legal systems and supporting financial assistance to SMEs. Since The New Basel Capital Accord had released the criteria and credit risk models of regulatory capital requirements for banks to follow, how to choose an appropriate model to measure the credit risk of SMEs and reasonably price the loan assets on a risk-return basis have become a common task of banks and the credit supplementation institutions. This paper uses the model developed by Kuo (2003) - ¡§How to Gauge the Default Probability: An Empirical Investigation of the Market-Based Approach to Bank¡¦s Loan Asset ¡¨ to gauge the probability of default to bank¡¦s loan asset for SMEs which guaranteed by Taiwan SMEG. Using market-based risk neutral approach, the probability of default for each SMEs¡¦ loan will be endogenously determined. This paper also uses the actuarial valuation principles to simulate the reasonable guarantee fee which should be received by SMEG through the breakeven analysis. The empirical results show that: 1.The tradeoff between recovery rate and the probability of default has joint effects. The probability of default increases rapidly while the recovery rate is over 70% and decreases smoothly while the recovery rate is below 60%. 2.The guaranteed loans over 70% coverage under the Authorized Approach have higher probability of default, as banks usually depend on the credit supp- lementation institutions for the larger portion of subrogation payment. 3.The guaranteed loans below 60% coverage under the Normal Approach have lower probability of default, as banks won¡¦t endure high probability of default and will turn to be conservative while lending to SMEs. Banks must also forward the relevant documents to the Taiwan SMEG for scrutiny and consideration, and it has reduced the default risk. 4.The guaranteed loans of 100% coverage under the Package Credit Guarantee have the highest probability of default if banks fully depend on the whole guaranteed coverage. However the bank loans lose given default will rely on bank¡¦s lending strategy, as the subrogation rate is set to be fixed on a maximum limit of guaranteed loans. 5.Using the actuarial valuation principles, with the estimations of pro- bability of default the reasonable rate of guarantee fee can be simulated through the breakeven analysis. The contribution of this paper is to submit the practical value for bank¡¦s loan pricing strategy, lending policy decision and credit risk management, also submit a subsidiary referential implication for SMEG to set the rate of guarantee fee, using the reduced form model to estimate default probability of bank¡¦s loan assets for SMEs which guaranteed by Taiwan SMEG, and using the actuarial va- luation principles to simulate the guarantee fee through the breakeven analysis.