Exploring A Small Enterprise Credit Rating Model

There are a great number of small and medium-sized enterprises (SMEs) in China. Since the introduction of reforming and opening policy, these SMEs play an increasingly important role in such fields as economic risk diversification, reduction of economic fluctuation, improvement of market system and market competing mechanism, and further reform of economic mechanism. At their stages of star-up and growth, however, small enterprises (SEs) as a vulnerable group face many inbuilt difficulties such as high operation risks and low credit levels. The most-hard-to-overcome bottle-neck is shortage of funds. Therefore, it is of strategic importance for commercial banks to explore a credit risk rating system so as to finance SEs'growth.As the main provider of funds to SEs, commercial banks (CBs) must do research on the credit risk control of SEs and then create a full set of risk control systems for safe credit business. In so doing, SEs and CBs benefit from a win-win cooperation. However, the most important source of profits of home CBs is interest difference of deposits absorbed and loans offered. Therefore, the CBs are required to increase credit business so that the profits of CBs will be increased according to the more earnings of interest differences. However, the development of business and risk is coexisted and associated. The more possibility of risk is according to the more credit quantities and the more possibility of risk loss is according to the total amount of credit lines. The risk will increase especially according to the credit business from CBs to SEs. The CBs face a dilemma choice of increase credit amount to earn more profits or decrease business to prevent risk loss in operating field. Therefore, it is a problem required to resolve that to strength the risk analysis of credit business to SEs, to build a credit system which can prevent risk efficiently and to find an economic and directed rating method.Through analysis of the present financing situation of SEs in our country, this thesis mentions the reasons of financing difficulties of SEs, and then analyzes the special features of credit business risk of SEs in our country through real cases. According to the specification of SEs in China and the special features of credit risk rating of SEs, the classification, credit business process, credit risk analysis of SEs, research and application significance of credit risk measurement models and present situation and system built of SEs in our country were researched in this thesis. The credit measurement model of SEs in our country is provided in this thesis by comparing and researching credit risk measurement methods at home and abroad, and then referring the advanced enterprises credit risk measurement and management experiences in developed countries. This research result was put into practice in actual works.The rating methods of macro and micro, quantitative and qualitative analysis are applied by the author with empirical research, data analysis and regression test in research process. The index system which contains quantitative and qualitative analysis is built through research in material and reference in rating system of SEs abroad in rating content. These methods provide feasible approach to the credit rating problem of SEs by the innovation for the condition of China.The cost of acquired information of enterprises by banks is reduced and credit risk of information asymmetry in credit process from CBs to SEs is decreased by researching and applying credit risk rating models of SEs. The efficient supporting is provided to risk management system of CBs in the same time.