An Empirical Study Of Relationship Lending And SMEs Credit Availability

SMEs (Small and Medium-Sized Enterprises) now have played an important role in Chinese national economy. However, because of SME's own characteristics and reasons of the information asymmetry, SMEs face the difficulty of financing during its development. A lot of empirical studies prove that as a new lending technology based on'soft information', relationship lending can help reduce the information asymmetry between banks and SMEs, reduce the transaction cost, and increase the credit availability of SMEs.First of all, this thesis gives literature review on the value of relationship lending and method of measuring the strength of bank-borrower relationship. Scholars used to study the effect of relationship lending to SMEs credit availability from the length of relationship, number of relation-banks, and scope of financial services, but ignore the interpersonal interaction factors to SMEs credit availability. This thesis indicates that the interpersonal interaction factors also play a significant role in SMEs credit availability, based on information exchange, agency costs and social capital theory. We surveyed 203 SMEs, and make a regression analysis of the relationship between bank-enterprise relationship factors and SMEs credit availability. Concluded that:(1) at operational level, relationships between the number of relation-banks, deposit concentration and SMEs credit availability is significant while relationship between the length of cooperation and SMEs credit availability is not. (2) at interpersonal level, relationship between the frequency of bank-borrow contacts and SMEs credit availability is not significant while the relationship between resource level and SMEs credit availability is significantly positive correlate. Thus we have found the key factors that affect relationship lending. At the end of the thesis, we put forward some proposals to improve the application of relationship lending in SMEs financing.