Study Of China's Sme Credit Problems

The development of small and medium enterprises (SME) have invigorated the economy of our country, raised the level of science and technology, and created lots of employment opportunities, which is very important to our economic development and social progress. Through theoretical analysis, we have found factors such as asymmetrical information and systematic reasons have affected lending to these enterprises. In practice, owing to the fact that these enterprises are small in scale, substandard in operation and lacking effective mortgage, etc, they are faced with serious lending bottleneck. All these have hindered their development. Therefore, the efforts from governments, financial bodies and social organizations are needed to create the environment for their development. Meanwhile, these enterprises should pay heed to operate on a standard basis, perfect the management structure, and raise the management level. Besides, they should also enhance the relationship with small and medium financial organizations, so as to gain more help.The paper summarizes the reasons for the lending difficulty of small and medium enterprises, and put forth the strategy to solve the problem on the basis of soaking up the experience of developed countries. In the strategy, what is mentioned first is the fact that how governments enhance their management, shift their functions, better their service, and establish the environment for the development of these enterprises. The author points out the operation of socialized organizations, such as credit evaluation organizations, guarantee organizations should be improved, in order to cope with the problem of asymmetrical information, However, the focus should still be how financial institutions raise their management level as well as risk-controlling capability, and adopt advanced methods to provide loans to serve the small and medium enterprises better. At the same time, the author points out that relationship lending is a suitable way of financing for small and medium enterprises.