Can Private Banks Solve The Financial Predicament Of Medium-small Enterprises?

This paper tends to refute the opinion raised by the "newly-built" faction in a debate who believe that the entry of private banks can solve the financial predicament of medium-small enterprises.which is equivalent to private enterprises. Therefore they brought out a logic that "Private banks can serve private enterprises". In order to fininsh the refute, we build up our proposition that in current period whether we can solve the financial predicament of medium-small enterprises by the policy which permits the entry of private banks i.e. the effectiveness of the entry policy of private banks. We name the effectiveness as solving the financial predicament of medium-small enterprises.We mainly discuss three questions. First what is the policy? Second what is the enviroment? Third whether the policy functions properly in the enviroment? Around the three questions, we employ the following theme. First we do reseach in two directions. One is to try to find out the main reasons (i.e. information asymmetry, regulation of interest rate and ownership prejudice) of the financial predicament of small-medium enterprises. The other is to discuss the current enviroment of China which consists of the financial developing period and the asset structure of bank system. The conjunction of two directions is the enviroment also contains the reasons. Then we discuss whether private banks can solve the three factors. Here we hypothize that private banks can overcome the ownership prejudice problem. So we discuss the topic under the operation of other two factors. The result is objection. This paper is organized as follows. The first section is the introdution. In the second section we build the basic model on credit rationing and introduce its applicative thoery financial restraint. Meanwhile we provide the evidence that China is in the state of financial restraint. In the third section we do a case study to analyze the financing ways of private enterprises in Zhejiang Province. We employ the model to explain it and find out the reasons of the financial predicament. In the fourth section, we first measure the asset structure of bank system which is a fraction of the enviroment. Then we develop the basic model into a multi-debit model. Here we discuss the effectiveness in two condtions. At last we draw the conlusion and discuss the defect of our paper.