Research On Mutual Guarantee Financing Of Small And Medium-Sized Enterprises

Small-media enterprises (SEMs) are a significant force in creating employment opportunity, promoting technical innovation, increasing fiscal revenue, and maintaining economic vitality. With the expansion of SEMs, they are becoming more and more important in national economy. However, owing to their lack of capital, un-sound financial system, poor ability of resisting risks, SEMs are facing financing difficulties, which have become a"bottle neck"restricting their development.The paper adopts the method of nominative study, supplemented by case study. On the basis of the review of previous research, the paper puts forward a mutual guarantee financing mechanism for SEMs, supported by the association.Firstly, based on theories of financing gap of SEMs, credit rationing, and transaction cost of mutual guarantee financing, the paper introduces the concept of mutual guarantee financing as the theoretical basis.Secondly, with reference to the experience of Japan, Italia, America and other developed countries in developing credit financing and mutual guarantee financing for SEMs, the essay discusses the enlightenment to China, and analyzes the status quo and problems of credit financing and especially mutual guarantee financing for SEMs in China.Thirdly, the paper designs a financing mechanism centering on mutual guarantee financing institutions, from aspects of the construction of mutual guarantee financing institutions, the arrangement of organizational structure, business process, and management. Such institution is founded by the local government, the association, SEMs and cooperating banks, which is a mutual guarantee financing institution supported by the association. The paper analyzes the percentage contribution of the local government, SEMs and cooperating banks, and believes that they should contribute more or less the same, which can solve the problem of financing difficulties of SEMs and promote internal power balance.Fourthly, the paper adopts dynamic game model to analyze the mutual guarantee financing mechanism designed above, studies the whole decision making process in detail, researches the factors affecting results and the risk of mutual guarantee financing. The final conclusion is that in order to restrict the decision making behavior of SEMs, and evade the risk bringing to the mutual guarantee institutions by malicious breach of SEMs, the breaching cost for SEMs should be higher than (2+r) times as much as the principal, where r is the lending rate.Finally, with the study of mutual guarantee financing model in Fabric Textured Yarn industry in Hengjing town, Jiangsu province, the paper analyzes the advantage and disadvantage of existing model as well as its enlightenment. Based on the study above, the author puts forward corresponding suggestions in promoting the development of mutual guarantee financing for SEMs.