What Explains The Financing Success Of Small Business At Icbc?

It is difficult for small and medium enterprises to obtain external financing in China. Small and medium enterprises (SMEs) account for the bulk of loans written at ICBC, which is the largest bank by market capitalization in the domestic market as well as in the global market. We conduct case studies to shed light on the factors underlying the financing success of some SMEs. First, we analyze the general difficulties faced by Chinese SMEs when raising external funds. Second, we elaborate ICBC s loan requirements and policies that govern loan applications for SMEs. Third, we examine the factors that influence lending decisions. For example, is the assessment of loan application solely based on assets, third party guarantee, or some soft information? We conduct quantitative analysis to investigate possible reasons for successful applications. In particular, using the data for successful SMEs, we perform DuPont Analysis and linear regressions to explore the impact of the financing on their corporate growth. Finally, we summarize the external and internal factors that contribute to the failure of SMEs in obtaining external funds. Some remedies are also suggested.