Research On Financing Modes Selection Of China SMEs

This dissertation briefly analyzes the main factors that affect middle and small enterprises financing from financer, investor and government. Introduces several capital instruction theories in the world, including MM theory, New-sequence financing theory, Agent-cost theory and Signal-model theory; it makes a comparison of the banking loan and the corporate bond, and then analyzes how these two kinds of financing methods make an impact on the middle and small enterprises under the situation of information asymmetry; it uses the capital structure and the debt source theories to explain how to choose middle and small enterprises financing; it comes to the conclusion that stock financing is the best choice, next is banking debt and then corporate bond, this kind of financing sequence results from our poor corporate governance system. Through the analysis of middle and small enterprises governance system, it points out that a perfect middle and small enterprises governance system can make China middle and small enterprises choose the financing sequence according to market factors.This dissertation analyzes the effects of financial institutions on middle and small enterprises financing choose through establishing a model. Middle and small enterprises financing by single banks has soft budget constraints (SBC'S) while middle and small enterprises financing by multi-banks has hard budget constraints (HBC'S). An HBC governance system will promote middle and small enterprises better develop and will achieve a higher growth rate than an SBC governance system when the uncertainty of Middle and small enterprises development is high. Analyzes the government action as the fund competitor has much to do with the government securities market, this government action can be divided into two stages: one is to make sure the issue of the government securities by restricting the development of the enterprises bond market and another by constructing and improving the government securities market. As the social management, the government action must consider, that who should bear the possible bankrupt costs after the issue of corporate bond, and thus result in the choice of the government action. Government should withdraw from the valid area of the market and enter the invalid area, development banking is beneficial to improving of middle and small enterprises financing.This dissertation analyzes that to offer fund for middle and small enterprise at founding initial stage and supervise founder pass by initial stage is assignment of financial innovation. Function of venture capital market in middle and small enterprise developing is to solve information and encourage problem. Introducing limited partnership can admit limited partners that have actual strength and train a lot of venture investors, can quicken our country venture capital develop. Empirical studies credit rating institution plays an important role in managing credit risk as supervisor of capital market, repeated game can emerge credit, if people lack chance of repeated game, a society inevitable emerges low credit level. At present, Chinese credit rating can not play a role as signal-transmitting mechanism, it restricts development of security market. Under the condition of keeping credit Rating institution independence, restricting quantity of credit rating institution, strengthening Credit Rating industry legislation, Chinese Credit Rating institute can improve and become perfect.