The Comparative Study On Guarantee Modes For Small And Medium-sized Enterprises

The object mode of loan guarantee of small and medium-size enterprises(SMEs)means which type of guarantee mode, policy, mutual or commercial mode should playa leading role. In the meantime, it is worth of expounding that whether the marketneeds other types of guarantee institutions to reach a stable equilibrium, so that theguarantee system could fully perform its complementary functions to the financialsystem and boost the economic growth and the employment.There have been many debates about the object mode of SMEs' guaranteesystem in China's academic sector. The early theoretical researches were focus on thepolicy guarantee and concluded that it should become the object mode. The laterresearches advocate the commercial guarantee. Also, some others propose the mutualguarantee. According to the comparative analysis of various countries' guaranteemode and case study of Zhejiang Mode, this paper considers that the best object modeshould be the one which is matching with China's actual situations, i.e, thedevelopment of SMEs and economy, the status of the legal and financial system.Consequently, the best mode could contribute to the improvement of financial systemand efficiency of capital allocation in order that the SMEs can enjoy a favorable creditextension. Therefore, China should advocates a multi-level guarantee system in whichthe mutual guarantee plays a deciding role with the supplementary effect of thecommercial and policy guarantee.The advantages of information, monitoring and transaction cost decides that themutual guarantee is the most suitable one for SMEs in China and should play theleading role. Due to the segmentation of China's financial market, commercial banks,investment banks and venture capital companies operates separately, this had resultedin disconformities of all market resources and efficiency loss. Therefore, beside forcontinuing encouragement for the development of policy guarantee as well as thecommercial guarantee, the ultimate purpose is to mobilize all market resources topromote financial innovation and efficient resource allocation so that the problem of credit discrimination of SMEs can be solved on a cooperative basis.Hence, Guang Dong should use Zhe Jiang for reference by advocating themutual guarantee while encouraging the commercial and policy ones.