Using Financial Innovation to Solve Problem of Lack of Financial Resources of SMEs

Abstract

The aim of this qualitative research is to study: 1. To study financial innovation models to solve the problem accessing funding sources of SMEs. 2. To study problems and limitations in development financial innovation and 3. To suggest policy guidelines and roles of the government and the financial sector in financial innovation development. The results of the study showed that, The funding sources of SMEs are divided into internal funding sources is retained earnings and external funding sources is loan from financial institutions or government agencies,  it is necessary for the borrower to have collateral for the loan guarantee. As a result, the borrower having to borrow from other people instead and borrowing from Loan shark, in this case the borrower will be charged a higher interest rate than required by law. In the Presents, there are channels of financial innovation or Fintech is P to P lending. That is a financial innovation that becomes a financial intermediary to serves the needs and reduce the asymmetry of information between borrowers and investors at lower operating costs than other approaches and yield higher returns to borrowers and investors than banks, together with increasing the productivity of the financial industry and increase accessing to financial services especially small businesses that do not have access to bank credit. The P to P Lending is a new innovation in the development of social enterprises and create new accessing funding sources and new markets in the financial sector, businesses can contribute to development through business processes. At present, P to P lending is still unpopular in Thailand due to legal ambiguities and the Thai financial and banking sector may be affected by P to P lending to stealing market share of banking business whose main income source from interest and lending fees.