Choice Of Financing Channels Of China's Small And Medium-sized Enterprises

China's small business plays an increasing important role in pushing forward the country's economic development and economic growth. Financing problem of small and medium-sized enterprises (SMEs) has been one of central issues in domestic capital market controversy since China's entry into the 21st century. The thesis's aim is to solve domestic SMEs' financing difficulties and obstacles through researching and comparing international practices.Unbalanced information alters "structure non-correlation" resulting from M-M theory. According to Myers and Majluf, enterprises managers possess information advantages comparing with outer investors. Considering stockholders' interests, enterprises always strictly follows Pecking Order rule, inner surplus →outer debt→ outer stock option, when making decision on business financing. Usually, SMEs will not choose stock option financing, because they suffers higher information unbalance degree. However, the reality is reverse to the theory. SMEs prefers stock option financing to outer debt financing resulting from their credit deficiency.The thesis through combing and researching financing theories, especially enterprises' financing structure and preference, tries to find a reasonable theory solution on SMEs' financing decision-making in line with SMEs' particularity. Furthermore, through comparing oversea financing channels and experiences, the thesis aims to find ways to solve domestic SMEs' bottle-neck problems. So far as the situation of China is concerned, the undeveloped direct financing system is in growing conflict with the financing demand of SMEs. Therefore, it is necessary to research the relationship of the establishment of security market and the choice of SMEs' financing channels. Definitely, the discussion here is about the feasibility, advantages and problems of the second-board market as a financing channel of China's SMEs. In conclusion, it is appropriate to establish a stock financing system serving domestic SMEs directly, in addition to the government continuing support to them.