Information opacity arising from MSEs’ lack of accounting records, inadequate financial statements or business plans also makes it difficult for potential creditors to assess the creditworthiness of MSE applicants. Besides, high administrative/ transaction cost of lending small amounts also queers the pitch for banks insofar as MSE financing is concerned.
2 Longer-term unsecured money markets, the most heavily exposed to counterparty credit risk, showed signs of stress, as signalled by the spread between the three-month unsecured interbank rate (Libor for the US and Euribor for the euro area) and the overnight index swap in three months’ time (OIS), a standard measure of tensions in unsecured markets.