SMEs Financing And Informal Finance

With the rapid development of economy, SMEs are becoming more and more important. And now, they are the one of the most powerful driving forces for our country's economy. However, SMEs financing plight is always a bottleneck that limits their development. Nowadays, scholars mainly focus on the institutional factor that lead to SMEs financing plight. While, little attention was paid on Informal Finance, which would alleviate SMEs financing plight effectively and promote rapid development of SMEs economy continually. Thus, it will be a question worthy of researching, about how to construct and perfect the financing system of SMEs, and how to create a better developing environment for Informal Finance which can serve SMEs better.We combined different methods for analysis in this paper---from common to special, concrete to abstract, empirical to regular, to confine SMEs and the Informal Finance on the basis of reviewing important literature researches at home and abroad.Via discussing the effect of Informal Finance on SMEs financing in Taiwan, we looked forward to seeking something helpful, which can be used as reference in mainland. In succession, investigation was made in Taizhou, Zhejiang province to illustrate the important role of Informal Finance played in SMEs financing through data. On the basis above, we used the basic production of the information economics theory to establish a simple model, which implicated that SMEs'satisfying their financing demands through the lowest informal civilian capital market was a rational financing decision-making. Finally, this paper summarized the contribution and risk of Informal Finance to our country's economy, then brought forward conclusion and suggestion on how to develop and perfect Informal Finance in order that it can serve SMEs better.Innovative points: on the basis of empirical research, this paper created a simple model to discuss the rational financing decision-making of SMEs. And, this paper put forward a new angle of view. We should develop and perfect Informal Finance via accounting principles to make it a better driving force of SMEs.