On Improvement Of The Legal System For The Securitization Of Bank Loans Made To Small And Medium-Sized Enterprises In China

Small and Medium-sized Enterprises(SMEs) have become more and more important in the economy of our country. Nevertheless the SMEs encounter difficulties in finance. They can't get adequate loan from banks due to the reason as asymmetric information, property right, the environment of finance, lack of measure to stimulate the banks to provide loans and the problem of SMEs themselves. This paper is exploring a system to alleviate or overcome the difficulties through asset-backed securitization. We have found, after have analysed the effect that securitization of bank loans acting on difficulties of SMEs'finance, that securitization of bank loans has unique advantage in dealing with asymmetric information, improving finance of SMEs and stimulating banks to lend their money to SMEs. And we get a great chance to learn the experience from the success of the U.S. implementing the SMEs'credit asset-backed securitization, which also increase our confidence in putting securitization of bank loans made to SMEs into trial use in China.The time of China fulfilling the system of securitization of bank loans made to SMEs has come, after exploring the theories, studying the experiences from oversea and practicing the credit asset securitization in our country on and on. In order to reduce the cost of operation and avoid the conflict between traditional law and securitization, we should choose a mature process as the general model for securitization of bank loans made to SMEs under the legal system to guarantee the securitization will work smoothly, and inversely the model might make contribution to consummating the legal system of securitization of bank loans made to SMEs. After the comprehensive consideration of the character of basis asset, the method of asset transfers, and special purpose vehicle(SPV) , we have made the decision that using credit asset securitization as the general operation frame, choosing trust as the method of asset transfers and SPT as SPV. Eventually the model of Credit Asset Securitization-Trust-SPT has become the general model for securitization of bank loans made to SMEs. Because securitization of bank loans made to SMEs is a innovation of finance to China, the conflicts between traditional legal system and securitization are inevitable, including some kind of investors are prohibited to buy securities, and the conflict between the duty of keeping secret by banks and the demand of revealing information by securitization is existence. In addition, some relevant systems are blank, including there is no government organization taking the guarantee role for the SMEs in the securitization process, the securitization of bank loans made to SMEs is not able to take SPC as SPV, and there are leaks in the supervision of securitization of bank loans made to SMEs. To cope with the problems mentioned before and speed up the schedule of implementing the securitization of bank loans made to SMEs, the chapter 4 provides suggestions through expanding the rank of investors, keeping balance between the duty of keeping secret by banks and the demand of revealing information by securitization, government's intervention, building up the frame of SPC for securitization of bank loans made to SMEs, and consummating the supervision system of securitization of bank loans made to SMEs. Eventually the system will manage to solve the dilemma of China's SMEs'finance.