The Study Of Sustainable Development For SME Credit Guarantee Institutions

Guarantee, a form of economic activity, has been played as a link between banks and enterprises in the macro socio-economic system. Via credit guarantees, banks can reduce the spend of the information asymmetry, the cost of management costs and the loan risks. Via credit guarantees, enterprises can also obtain funds due to third-party credit enhancement, leading to the increase of the financing efficiency in the whole community. The SME Guarantee Corporations are professional, which have obtained the economic and social benefits through lending credit resources and controlling of credit risk.The development of China’s guarantee industry is the product of the continuous development of entire economic system transition and market economy system. Guarantee industry in China is generated in the process of financial reform and adjustment of national industrial policy. Although with only a dozen years of development, guarantees industry gets rapid growth, and becomes an emerging dynamic industry.As China’s banking system can’t meet the financing needs of the majority of small and medium-sized enterprises, the credit guarantee industry in China has unique advantages in the financial system for small and medium-sized enterprises. From the view of SME financing, the guarantee industry has played a significant role in the current financial system. The construction and development of the SME credit guarantee system, has played a positive role on alleviating the difficulties of SME loans, enhancing the credit rating of SMEs, promoting the healthy development of small and medium enterprises, and expanding employment and cultivating sources of tax revenue. As a result, SME credit guarantee has actually become an integration tool of policy factors and the commercial operation of instruments.At present, though the rapid development of the SME credit guarantee institutions plays a positive role on easing the financing difficulties of SMEs, it also exposes a growing number of contradictions and problems. Such makes the SME credit guarantee institutions highly specialized and high-risk industries. How to strengthen internal management, promote business development and innovation, and explore the way to grow and sustainable develop, is the widespread concern topic of many guarantee institutions. Through exploring the SME credit guarantee institutions, examining their risk management and operational efficiency, and taking different tactics for different problems, it will help the guarantee institutions to reduce, diversify, transfer and compensate risks, and improve their risk control capacity and competitiveness, leading to the promotion of the healthy development of the guarantee institutions. It also helps to promote the formation of a good credit environment, resolve social indirect financing pressure, promote financial innovation, and pursue government policy goals, which have both important theoretical and practical significance.SME credit guarantee institutions have played an important role in promoting the development of small and medium-sized enterprises. In the other way, market competition, risk management and operational efficiency also require SME credit guarantee institutions innovation and sustainable development. This paper, bases on the status, mode of operation and reality basis of the SME credit guarantee institutions, probes the sustainable development of the SME credit guarantee institutions from risk management, operational efficiency and business model innovation system.Based on the framework, the content of this study are:Chapter One is the introduction, which introduces the research background, key points, framework, contents, methods of research, innovation and inadequate.Chapter Two is a logical analysis of the role of the SME credit guarantee institutions. The necessity of the SME credit guarantee institutions has been discussed from two views: the origin of the credit guarantee system and the role of the SME credit guarantee. The widespread existence of credit guarantee system in countries which continues to grow and develop fully shows that it is a long-term effective form to promote the SME financing. The relationship between the SME credit guarantee system, small and medium-sized enterprises, and commercial banks shows that the SME credit guarantee institutions should strengthen management and innovation to improve the market position and role.Chapter Three explores the operation mode of the credit guarantee institutions. First, three main modes of SME credit guarantee system in China is discussed one by one:policy guarantees, Mutual guarantees and commercial guarantees. Then, it examines the development status of China’s SME credit guarantee mode. It shows that along with the expansion of the strength and the funds scale of the guarantee institutions, profit growth has been relatively stable, failing to follow up. In2010-2011there is a great impact on the operation of the guarantee institutions. Guarantee institutions for SMEs in China have been some innovative models around.Chapter Four probes the sustainable development of SME credit guarantee institutions from the view of risk management. The identity of the credit guarantee is the process to pass those SME loan risks to guarantee companies and to mitigate risks by their own risk management capabilities. Risk management is the primary task of the guarantee institutions, and risk management ability is the most important skill for guarantee institution’s survival and sustainable development. The SME credit guarantee institutions should actively implement the comprehensive risk management. Under the comprehensive risk management strategy, the SME credit guarantee risk management index system includes not only early warning mechanisms, but also the risk control mechanism. Early warning and control mechanisms not only consider the account, financial general information, and the personnel, family and other non-financial factors have been considered as well. Forming a comprehensive risk management system and establishing a sustainable business model can help guarantee institutions to achieve sustainable development.Chapter Five discusses sustainable development of SME credit guarantee institutions from the view of operational efficiency. To improve competitiveness, guarantee institutions should focus on their operational efficiency in the process of development. In this paper, the generalized DEA model is used to assess the operational efficiency of the SME credit guarantee institutions from the output direction. It is found that guarantee institution’s overall efficiency constantly changes over time:the efficiency of guarantee institutions in2011kept overall stability, but declined in2012. The increases of the efficiency between different companies have different reasons. The changes of macroeconomic situation lead to greater volatility in guarantee institution’s operating efficiency, while they have higher overall efficiency at the beginning of the year. Continuing operations will enhance the stability of operating efficiency of guarantee companies.Chapter Six discusses comprehensive innovations and sustainable development of operating mode in the credit guarantee institutions. Profit model innovation is an ongoing basis of the SME credit guarantee institutions. Effectively dispersing the insured corporate credit risk and the implementation of counter-guarantee measures, these are the key points to the operation of credit guarantee institutions. Guarantee institutions should be innovative in the way of collateral and counter-guarantees. Improving operational efficiency is the pledge for credit guarantee institutions to stand out in the fierce competition with other banks. Credit guarantee institutions should adhere to the principle of safety, liquidity and profitability, and the market-oriented operation of sustainable prudent business model.Chapter Seven includes conclusions and policy recommendations.The innovations of this paper are:on one hand, this paper used the generalized DEA model to assess the operational efficiency of the SME credit guarantee institutions from the output direction on the basis of the SME credit guarantee business performance and risk management status, and further discussed the changes in the efficiency of small and medium-sized guarantee. On the other hand, this article explored the sustainable development model from innovations in many ways, including innovations in profit model, innovations of risk management path and innovations in cooperation process. Due to the data limitation, this study of SME credit guarantee institutions risk management does not apply the company’s financial indicators data for empirical research. In future, with the improvement of data, this paper will have a further in-depth study.