Sme Credit Guarantee Research

Small and medium enterprises (SME) credit guarantee is widely used in the world to help the SME finance. It has been an important measure in rebuilding relations between banks and enterprises, strengthening credit concept, resolving financial risks and improving the financial environment for SME. It's also effective in changing the government's duty from intervention to political direction. This thesis is based on the author's concrete practice, it tries to give some useful advices on how to develop Chinese own SME credit guarantee considering the present condition and major problems. As risks are vital ingredients limiting the development of SME credit guarantee, the thesis especially focuses on discussing feasible ways to guard against and control guarantee risks. The purpose is to help SME credit guarantee institutions explore actively, operate prudently and play more and more important roles in helping SME finance.This thesis can be divided into four parts:The first part introduces credit guarantee briefly in the beginning, then specially explores the reason for the establishment of SME credit guarantee, giving an objective evaluation of its significance and limitation. SME are of vital importance to a country's economy, but they have much difficulty in outward financing, mainly in getting bank loans. That explains why governments emphasize on the establishment and development of SME credit guarantee so much. And the SME credit guarantee does live up to it, helping a lot in SME financing and bank asset improvement. However, SME credit guarantee is subjected to the economic and financial environment of a country, its role depends on the present financial channels and measures. Since bank loans are the main resources for SME financing in the long run, it is necessary and important to develop SME credit guarantee in our country.The second part mainly introduces the status quo of the SME credit guarantee in China. SME credit guarantee has developed in an amazing speed ever since the 1990s, especially since 1999, when the government began to pay attention to SME,drew relevant laws and regulations to stimulate them grow. At present, a nearly complete credit guarantee system has been founded, and the SME credit guarantee institutions are operating normally from entering market to handling everyday business. This part will give a general view of SME credit guarantee in China, studying the successful experience of it.The third part is the key point of this thesis. Although SME credit guarantee has made great achievement in the past several years, it still faces lots of difficulty. Such as SME are secondary in asset and credit, government and banks lack of correct understanding of SME credit guarantee and the present credit environment and legal situation are unfit for the permanent healthy development of SME credit guarantee. All these drawbacks must be overcome. The author gives some countermeasures to help create favorable inward and outward circumstances, also to help the SME credit guarantee institutions strengthen management and develop steadily.The fourth part is the main focus of this thesis, too. Credit guarantee business is commonly acknowledged as a high risky business, and loan guarantee for SME bears much more risks. SME credit guarantee institutions have to operate carefully and prudently to avoid all the prospective risks. To guard against and control guarantee risks, the author suggests as follows: (1) setting up complete inner control mechanism to avoid risks; (2) establishing risk management procedure to confine guarantee risks to the least, including risk analysis, risk control and financial management for risks; (3) transferring risks by means of counterguarantee and reguarantee; (4) diversifying risks among enterprises, financial institutions, government and guarantee institutions. All the above advices can be useful in the SME credit guarantee development.