A Study About SMEs' Relationship Finance Of China's Large-scale Commercial Bank

Medium and small scale enterprises have the function which can not be replaceable to impel economy development in the world scope; their importance has become the fact which can not be controversy. However, financing-trouble has become the development bottleneck of medium and small scale enterprises.The primary reason is that the information asymmetry is very high in the financing process of medium and small scale enterprises. Information asymmetry causes that the banks can not be able to learn enough correlation information of medium and small scale enterprise, such as financing report form. To keep away the finance risk, banks always reject financing for medium and small scale enterprises.Relationship finance may alleviate the information asymmetrical degree when medium and small scale enterprises financing and causes financing to be easier to carry on.Relationship finance is the frontal research issue arising from the 1990s. Relationship finance is one kind of financial service the bank provided. The bank provides relationship finance by obtaining the enterprise inner information, and appraises the prospective profit of investment and obtains the repayment by building the bank-enterprise's long-term relationship. The relationship finance theory thinks that the bank can find out much inner information in the long-term contact process with enterprises, and overcome the information asymmetry. This becomes the comparative advantages of the bank relative to its rival, and at the same time, relationship finance can alleviate the financing trouble of medium and small scale enterprises. Many literatures reveal that the importance of relationship finance on medium and small scale enterprises has been proved in US, Japan and so on. Generally, it is difficult to gather and transfer tacit information. When provides relationship finance for medium and small scale enterprises, relative to the medium and small banks, the big banks have not advantages because of the complicated hierarchy, the organizational structure, and the decision-making process, so there is a theory: "Small Bank Advantage".However, because China is being in the transition process from central planning economy system to the market economy system, the market mechanism is imperfect, and the enterprise's financing environment is not so good. The Chinese government implements strictly regulation for the medium and small banks entering this special industry. Moreover, because of the "short-eye" behavior, in real life, the medium and small private financial institutions still prefer the big enterprises to small. This cause the small financial institutions are few. Under this circumstance, there is a quantity restriction or financing supply shortage to finance for medium and small scale enterprise financing. Therefore, in China, it is not so good only to rely on the small financial institutions to solve the financial trouble of the medium and small scale enterprises.The four big state-owned commercial banks always finance mainly for big state-owned enterprise for a long time in China. But there is equilibrium in capturing the big state-owned customers. To break the market steady condition the banks have to pay more marketing cost. After the reform and opening policy, along with the property reform of the state-owned enterprises, the four big commercial banks compete more and more, and their profit reduces. After entering the WTO for five years, some foreign bank such as the Standard Chartered Bank, Citibank, HSBC, East Asia Bank, etc. starts full RMB services, the competition is more brutal. In order to reply to the competition, increase bank's income, and disperse financial risks, the four big commercial banks have to widen their vision and their thought, to advance the innovation, and seek for the new customers. Obviously, the great number of medium and small scale enterprises provides a good chance.In Japan, its big banks all discover the medium and small enterprises financing market. China's four big commercial banks absolutely use the Japan's financing experience for reference, transform their old ideas as soon as possible, seize the medium and small scale enterprises the financing market through relationship finance relying on their superiority of geography and humanities environments, develop their profit space, and strengthen their competitive competence.Based on above-mentioned, the author think that China's large-scale commercial banks also can provide relations financing for medium and small scale enterprises, and aim to provide several suggests to alleviate the financing trouble of medium and small scale enterprises.