Assessment of Secondary Markets for Movable Assets in the Jamaica Manufacturing Sector
One of the critical challenges to micro, small, and medium enterprises (MSMEs) continues to be access to finance (World Bank 2019). Asset-based lending (ABL) is emerging as a unique financing option for businesses and a new way to provide working-c...
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| Language: | English |
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International Finance Corporation, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/692151605592996578/Assessment-of-Secondary-Markets-for-Movable-Assets-in-the-Jamaica-Manufacturing-Sector http://hdl.handle.net/10986/34810 |
| Summary: | One of the critical challenges to micro,
small, and medium enterprises (MSMEs) continues to be access
to finance (World Bank 2019). Asset-based lending (ABL) is
emerging as a unique financing option for businesses and a
new way to provide working-capital financing to support
business growth and sustain business operations. The
approach leverages nontraditional but valuable movable
assets such as machinery, equipment, securities, accounts
receivable, agricultural produce, and intellectual property
rights as collateral to secure financing from credit
institutions. These assets are common among entrepreneurs
and established businesses but are seldom considered as a
useful form of collateral to access short-term financing.
Interestingly, among developing countries, movable assets
represent as much as 78 percent of the capital stock of
enterprises relative to immovable assets such as land and
buildings (22 percent) (Alvarez de la Campa 2011). Despite
this, insufficient collateral continues to be one of the
main reasons loans are not granted in emerging markets
(Fleisig, Safavian, and de la Pena 2006), perhaps reflecting
the preference of financial institutions to utilize
collateral based on immovable assets such as land and
buildings. This assessment seeks to examine MABL in Jamaica,
with a focus on developing possible options for deepening
secondary markets among assets commonly used as collateral
in MABL. The report includes recommendations for developing
secondary markets, among other potential assets that can be
used for MABL, as well as general steps for implementation. |
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