The Study On SME' Finance And Relationship Lending

Asymmetric Information is the important reason of SME lending puzzle. On such a premise, we make relationship lending, which can lower the degree of asymmetric information, as a core and point out that the puzzle can be solved through relationship lending between SME and Small & medium banks. This article not only analyzes the balance of the both sides'costs and yields in the course of establishing and keeping relationship lending, but also constructs a model. The model proves that if the two sides underwrite the relationship lending contract on the balance of their costs and yields, this contract can be maintained in most cases. So the balancing of both sides in establishing the relation is the key to realize relationship lending. Both SME and Small & Medium Banks have advantages on relationship lending, thus relationship lending can be realized more easily between them. Further, this article analyzes some problems on impacting relationship lending and puts some related suggestions.