High-tech SMEs Credit Decision-making Based On Real Options Approach

With the construction of an innovative country, high-tech small and medium enterprises (SMEs) have become the lead in the economic development. One of the most intractable problems is the financing bottleneck. Since direct investment model such as venture investment isn't mature in our country, indirect financing provided by commercial banks is particularly important. From the history of foreign high-tech SMEs, bank credit is always an important way. The gap between deposit and loan is increasing year by year, thus there is further profit if the credit structure can be adjusted. This is an opportunity for commercial banks to innovate their business. The primary issue is selecting high-tech SMEs reasonably.Most study of credit decision-making aim at macro perspective such as financial supervision and national economic policies. From the point of micro level, this paper innovatively introduces real option method of venture investment to the field of commercial banks' credit assessment and has research on multi-stage real options theory in the use of credit decision-making. This paper reviewed the research actuality of credit decision-making and uncertainty problem, and pointed out the traditional credit decision-making approaches don't match with high-tech SMEs very well and the flexible value of management should not be neglected. Based on the enlightenment of venture investment, this paper compared the similarities and differences of the venture investment and bank credit. Then summarized the theory of real options approach, analyzed the feasibility to use the multi-stage real options model. Then analyzed the actuality of credit decision-making, improved high-tech SMEs credit decision-making and put forward relevant method and flow. At last, studied a case of the biological and medical company, and found that the option value of high-tech SMEs should not be ignored in credit decision-making by comparing the traditional NPV method and multi-stage real options approach. What's more, this paper puts forward corresponding countermeasures and suggestions.