| Medium and small-sized enterprises (MSEs) play an important role in a country whichever the developed country or the developing one. They can accelerate the finance, increase the chance for job, and boost the technology. For example, in China there are more than 90% enterprises are MSEs. They occupy half of the fixed assets in all the enterprises. More than 80% workers are working in MSEs. Many countries have recognized the important role of MSEs, so they draft laws or policies to support the development of MSEs. Some countries even build up special departments to govern them or provide serve for them. Hardly obtaining finance has seriously restricted the development of MSEs. There are two main finance ways, one is direct financing, and the other is indirect financing. The direct financing is to issue stocks to gain finance. But it's difficult for MSEs to ether the stock markets because the lever of is too high for many MSEs. Then the main way for MSEs to get finance is the loan from banks, which is the indirect financing. But for many of them it's not easy to ask for loan. Banks think the credit of the MSE is low. Small scale, lacking fixed assets for guarantee, opaque financial information lowers the credit of the MSE. Guarantee institution can provide guarantee for MSEs to get loan from banks. Many countries have builded up guarantee system. The forms of the organization of the guarantee institution are varying, which include government department or government agent. China builded up guarantee system after the year 1999. By the end of 2000, there were about 200 cities had guarantee institutions. But for some reasons, many guarantee institutions cannot completely perform their duty. One of the problems is that in many cities the building of the guarantee institutions does not conform to the standard. In these cities each government department builds its own guarantee institution serving for the MSEs in different films, for example the guarantee institution for the commercial MSEs or the guarantee institution for the high-tech MSEs. That cuts the market of guarantee apart and disperses the limited funds. Another problem is that the local governments control the fund of the guarantee or guarantee institutions and usually perform them by the willing of governments, not by the demand of enterprises or banks. The interference from governments will probably damage the health development of the guarantee institution. To solve the two problems, the local government must draft standards or laws and manage the guarantee institution according to the standards or laws.If an enterprise keeps long-term relation with the bank, the enterprise will apply for the loan easier, because the long-term relation will contribute to solve the problem of opaque information between the bank and the enterprise. The bank's credit safety based on the information analysis. As to MSEs, the problem of opaque information is serious. If the enterprise does not set up long-term relation with bank or the enterprise opens an account in one bank while it has accounts in many other banks, the bank can not completely know about the enterprise's information and any cautious bank will not provide loan to the enterprise. The information, which the bank gets, mainly comes from the enterprise's count (income and expense) in the bank. It takes long time for the bank to get all it wants (say 2 years or so). If the enterprise and bank have not steady relation or the enterprise opens accounts in many banks, then any bank cannot get integrated information. In this situation, if the enterprise cannot offer financial report forms being checked up, the bank will usually refuse to offer credit loan or the mortgage is relatively harsh. In foreign counties, the MSEs usually keep long-term relation with banks and they only keep relation with very few bank. Most MSEs have a fundamental bank, which provide fundamental financial serve. In America, dates show that if an enterprise has relation with many banks or other financial institute, the chance...
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