Studies On Relationship-based Lending Solution To Small And Medium Enterprises Financing Problem

China's small and medium enterprises has become an important engine of China's economic growth, which is one of the most vigor and vitality groups of China's socialist market economy. SMEs has played an important role in product technological innovation, industrial restructuring, promoting economic development and narrowing the urban-rural and regional income gap, solving the employment and transferring surplus labor of rural, and so on. However, SMEs also encountered many difficulties in its development process, especially difficulties in financing, which has become a bottleneck restricting the development of SMEs in our country. Since the second half of 2008, the performance of SMEs financing difficulties become more prominent because of the world financial crisis on the negative impact of China's economy increasingly clear. How to solve the financing difficulties of SMEs and how to promote the healthy development of SMEs in China is becoming the urgent problem to the current theory, finance and business.This paper mainly studied the relationship-based lending to solve the financing problems of SMEs in China. At home and abroad, many experts and scholars have studied the issue of SME financing, this paper reviewed related research. According to research needs, first of all, we determined the object of study, basing on criteria for the classification of SMEs; Second, we analyzed the status quo of China's SMEs financing, we found SMEs financing channels is small, mainly depend on endogenous financing, loans is the primary way of foreign financing, mainly due to endogenous financing is limited and foreign financing is inadequate, SMEs financing difficulties are widespread; Again, we used asymmetry information will lead adverse selection theory, we give an explanation of lack of external finance for SMEs in theory, which caused by the banks refused to loan, as a result of lack of external finance for SMEs. From this analysis, we pointed out that asymmetric information between banks and enterprises is the root reason for SMEs financing difficulties; And then we proposed to establish the relationship-based lending between them responsing for the root causes. By comparing with other financial means, we found that relationship-based lending with low cost and potentially high-yielding characteristics. We obtained the stability of the relationship-based lending features, though cost-benefit analysis of establishing and maintaining the relationship-based lending. From the enterprise number change model, we found that the relationship-based lending has inherent advantages of identifying the enterprises. Finally, according to China's actual situation and foreign-based loans experience, we improved the policy proposals further from the government, financial institutions and enterprises.Financing difficulties of SMEs is a worldwide problem, this paper attempts to look for a solution from the root reason of the financing difficulties. This paper mainly used the mathematical analysis, cost-benefit analysis and graph analysis approach to interpret the relationship-based lending is an effective lending technology for SMEs financing difficulty in theory.