Research About Chinese SME Financing Problems And Countermeasures

Whether in developed or developing countries, the development of SMEs is an important pillar of national economy. SMEs cannot be ignored and they play an important role in many fields of China. Although SMEs have done a great contribution to the modernization of our country, they are always be with financing problems. And financing problem is now the most serious problem of the development of SMEs. To development SMEs is a good way for our society to get ride of the great pressure. China is in a critical period of economic restructuring at present, the society is under a tremendous employment pressure. So how to help SMEs resolve the financial problem has become a hot topic now with great significance for economic development.This paper focuses on the financing problems. There is an literature review at first through which we can have a basic idea of SMEs financing. Then it describes and defines some concept of the problem including what SMEs is and what enterprise financing is and so on. There is a review of the theories related to corporate finance after that. Traditional financing structure theory, modern financing structure theory and new financing structure theory are all mentioned. Those theoretical analysis is the basic of empirical analysis. Then this paper introduces the current situation of SME financing including SME financing overview and the cause of those risks. We can have a clear picture of SME financing problem through those introduction.The next part is a research about SME financing structure which is a good way to get a deeper sight of the problem. First step is a qualitative analysis on the micro and macro factors which influence SMEs financing. Each indicator is analyzed separated. Next step is a quantitative analysis of those factors. Assets and liabilities ratio is the main index of the analysis with other 9 indicators. Then we establish a multiple regression model and obtain the financing structure of the specific impact factors. We get two results, one is that the asset and liabilities ratio is about 40%.The SMEs are facing financing troubles. The other is size of the business, return on net assets, turnover, asset value and guarantees have appositive correlation with financial structures. The enterprises'internal retained earnings, growth ability, risk control have a negative correlation with financial structure. The company's product unique, non-debt tax shield and the funding structure have no significant relation with financial structure.Last part is about the suggestions of how to optimize the financing structure of SMEs and how to get them out of the financing troubles. There are three ways to go. First of all, the SMEs should enhance the own quality. Second, improvement of financing channels for SMEs is necessary. Third, the government should play a guiding role in SMEs financing.