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    Asia’s Green Revolution: A look at SME finance

    Published On: 6 October 2021

    With small and medium-sized enterprises set to play a crucial role in Asia’s sustainable growth, a new Asia House Research report, published as part of the Asia House COP26 Programme, looks at the increasing importance of green finance in developing SMEs in the region.


    Phyllis Papadavid, Head of Research and Advisory
    Phyllis Papadavid is a leading international economist and financial strategist with extensive research experience across the private and public sectors. She leads Asia House’s Research and Advisory work, driving the organisation’s research agenda and directing projects.



    Asia’s small and medium-sized enterprises (SMEs) are essential for economic growth. Greater financial diversification for the largest emitters – China, India and Japan – particularly into green finance, is of critical importance given the future costs of the climate crisis. Prospects for this are dimmed by the macroeconomic backdrop: stagnant investment spending as a share of GDP since the 2008-09 crisis. SMEs typically access banking sector finance in addition to informal finance, but this is starting to change. Asia’s SMEs are beginning to tap into alternative sources of finance. In the absence of an acceleration in bank lending and investment spending, some of the higher emitting economies’ firms are turning to green bonds. Increasing degrees of coordination within and between countries suggest that green finance is accelerating in Asia. Enhanced coordination has the potential to significantly contribute to decarbonisation.


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