Research On Ethnic Financing Mode Of Private Enterprise

The private economy not only played a crucial role in the economic take-off at the first period of China's economic reform, but also an outstanding force to guarantee the fast and sustained growth of China's economy. However, restricted by many factors, the economy in the ethnic regions has been the weak link of China's national economy in the past years. And the private economy in the ethnic regions has confronted with many difficulties in the further development. The year of 2011 is the start-up year of the twelfth five-year plan and also the first year of executing the new strategy of development of the west regions, which is good news to the economic development of the ethnic regions and especially the private economy of the regions. In spite of this, in the economic development, the private economy has some implications, such as financing difficulties, the lack of proper policies and the deficiencies in the government's administration. So it is hard for the private economy in the ethnic regions to achieve a leap in further development in the near future. For the above-mentioned situation, the private economy in the ethnic regions has difficulties to grow larger and better.Focusing on the above-mentioned restraining factors and combining with China's present macro-economic policies and in order to promote the development of the private economy in the ethnic regions and help to solve the financing problems, this article provides an analysis of the present development situation of the private economy in the ethnic regions, taking the financing problems encountered by the private enterprises in Guizhou Province and with the method of logic analysis and comparative research method on the basis of documents and materials. The results of the analysis show that there are following reasons that have caused difficulties of financing for the private enterprises in the ethnic regions: the high transaction cost caused by asymmetric information which reduces the willingness of providing loans from banks; the complicated procedures of applying loans and excessive demands of collateral loans from private businesses; and the narrow financing channels for the private enterprises. Some other important reasons of difficult financing for the private businesses are the opaque financial standing of private enterprises, the serious shortage of capital and the poor credit records of private enterprises. The improper performance of the government is the systematic obstacles for the private enterprises to make financing from banks. Based on the above analysis, the paper puts forward some counter-measurement and suggestions for the solution of the financing problems in the private enterprises, such as setting up credit guarantee agencies and credit evaluation institutions in the ethnic regions; establishment of indirect or direct financing market for the private enterprises in the ethnic regions; to standardize and optimize government behaviors to support the development of private enterprises and guiding the internal reforms of the private enterprises in order to adapt the demands of the market economy.