A Study On Financing Under Export & Credit Insurance For SMEs

SMEs are of great importance in China's foreign trade sector. In the context of the financial crisis, the risk of buyers' default, rejection and bankruptcy are getting larger. In the process of foreign trade, SMEs cannot be exposed to doubtful debts as a result of their small scales. The export earning security becomes a common sense for SMEs. Fortunately, the Export Credit Insurance (ECI) can protect SMEs receiving earnings in time that highlight ECI's safeguard function. In addition of the safeguard function, ECI could also lift the credit ratings for SMEs, therefore increase financing channels. It is called'Financing under ECI'. Financing under ECI could partly solve the financing difficulties of SMEs. So financing under ECI is a theoretical and practical research topic.This dissertation first interprets the economic basis of ECI and Financing under ECI, then introduces the condition of developed countries. The working capital loan guarantees of Ex-Im bank in the U.S. and the same product in Japan are both worthy of our reference. The core part of the dissertation is supply and demand balance analysis of Financing under ECI. It is concluded that there is a balance gap for Financing under ECI's market, that means demand is larger than supply. Three models could used to increase the supply:one is SMEs use 'Financing under ECI' alone, the other is accounts receivable transferred under ECI, the last one is forfeiting under ECI. The dissertation makes some suggestions for Financing under ECI of SMEs after the analysis above. The government should strengthen the guidance policy, establish a special fund for financing under ECI, foster the demand and increase the supply.