| Through doing research on the small and medium enterprises'(SME's) finance difficulty from the angle of credit rationing, the author finds that the fundamental reason for SME's finance difficulty is the high marginal information cost of SME when it was compared to large enterprises. There are two ways to reduce the cost for finding and dealing with the information. One is the"small and medium financial institutions option"; the other is the"credit guarantee option". The first option is not the best one because the bank whose goal is to maximize its profit only can realize the single and partial equilibrium. However, the whole social welfare equilibrium requires the large enterprises and SME with the same marginal returns should enjoy equal financial support. In order to make the partial equilibrium close to the whole equilibrium and enhance the social welfare, the information cost should be reduced to make the marginal information cost of large enterprises and that of SME equal. The credit guarantee institutions (CGIs) for SME increase the credit supply through reducing the marginal information cost. As a result of it, the whole risk level of SME is reduced at the same time and the position of credit rationing equilibrium is also moved to make the partial equilibrium close to the whole equilibrium.On the basis of theory analysis, a model on credit guarantee is built to show that CGIs can solve the usual adverse selection and moral hazard problem which the bank always face under several hypotheses, such as non-profit, etc. The author also reviews the stats quo of the development of CGIs in China and does some researches on the institutional limitations of the existed CGIs. He suggests that the framework that the mutual credit guarantee institutions should be the principal part and the non-profit and commercial CGIs are the supplemental part should be built up in China. At last, he makes some suggestions on the development of CGIs from several aspects. |
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