Choice Of Financing Channels For Small And Medium-sized

As the socialist market economy develops and improves, small and medium-sized enterprises have grown rapidly in the past 30 years since the reform and opening up. Those enterprises have become major forces of technological innovation, most active elements in national economy and driving forces of economic growth. The sixth plenary session of the sixteenth Chinese Communist Party's Congress points out that when building socialist harmonious society, the development and growth of small and medium-sized enterprises play a more important role in improving productivity, narrowing urban and rural gaps, enlarging employment, increasing individual incomes and pushing forward technological innovations. However, those enterprises still face many difficulties and problems ahead, in which financing difficulties have become major impediments to their sound development.This thesis mainly focuses on analyzing financing difficulties facing small and medium-sized enterprises in respect of financing channels. It gives a detailed analysis of the advantages and disadvantages of different financing channels for those enterprises and discusses whether the channels are suitable for those enterprises. The thesis also explores the causes of financing difficulties in aspects of enterprise itself, mechanism discrimination and credit guarantee. By analyzing the financial data of Siping Xincheng Industry & Trade Company and"A company", the thesis intends to illustrate that compared with large enterprises, small and medium-sized enterprises have more difficulties in financing with a high cost. Investors may face higher risks when investing small and medium-sized enterprises, which results in financing difficulties for those enterprises. Taking the successful financing case of Beijing Capital Land Ltd. as an example, the thesis puts forward appropriate financing channels and detailed plans for small and medium-sized enterprises.Countermeasures from three aspects may be taken to solve the financing difficulties. First, enterprises themselves should improve management structures, improve market competitiveness, enhance internal financing, establish modern enterprise system, improve its overall performances and credit status and have a better understanding of different financing channels. Secondly, financial institutions should change business concept, optimize financing environment, provide suitable services, establish multi-level and all-round financial system, perfect operational mechanism, strengthen the main role that banks play in financing, standardize and develop small and medium-sized financial institutions and foster relationship banking. Thirdly, the government should play a guiding role in building the credit guarantee system for small and medium-sized enterprises'financing. Efforts should be made to establish a multi-level credit guarantee system for those enterprises in which the government gives financial support and non-governmental organizations participate, to enhance the cooperation between credit guarantee institutions, banks and other financial institutions, build a risk-sharing mechanism, enhance the standardization and supervision of credit guarantee institutions, build enterprise and personal credit and evaluation systems and build a socialized, specialized and internet-based financing system for small and medium-sized enterprises.