While private banking still plays the main role in the region as a financial intermediary in East Asia, local domestic banks are not responding well enough to the strong requirements for finance in the communities they serve. A particularly significant fact underlying this current situation is the problem of "information asymmetry," where by financial institutions lack adequate information on borrowing firms, especially small and medium-sized enterprises (SMEs), the cost for information gathering is high for them, and the accuracy of available information remains low. This results in the lack of their access to finance.

This issue is particularly important in East Asia, because of the widely-recognized dominant roles of SMEs, in creating employment opportunities, supporting local economic activities, promoting entrepreneurship, producing innovations, and supporting larger corporations. This is true both in the industrialized countries among the ASEAN plus three members, i.e. Japan and Korea, and the developing countries in the region. This lack and incompleteness of financial information in the banks has led to the SMEs’ lack of access to formal finance. Moreover, in terms of macro-economy, the weak finance sometimes led to the outflows of domestic financial resources once from the region, which are in turn re-invested toward East Asia by the foreign financial firms.