Sme Credit Business Risk Prevention Research

Small and medium-sized enterprises(SME)play a vital role in driving China's economic development, innovation and competition. Chinese commercial banks are facing a difficult dilemma over SME lending: whether to increase loans to SMEs to achieve and sustain competitive advantage, or to reduce SME loans to avoid high credit risks associated with small-business. How to improve credit risk management for SMEs is an important issue for Chinese commercial banks.This paper explains the credit risk management. Section one is introduction, including reserch background, research problems, research methods, and contributions. Section two analyses the basic connotation of credit risk. The third section describes the positive role of SMEs and the status of the credit business. Section four analyzes control system for credit risk and the difficulties in risk prevention. Finally, provides a set of strategies and guidelines for commercial banks to manage SME credit risk.Compared with large enterprises, the SMEs have smaller operation scale, less marketing competitive capacity, and less access to formal sourcs of external finance. The characteristics of SMEs require a different credit risk management structure from large enterprises. The goal of this paper is to develop a set of strategies and guidelines for commercial banks to manage SME credit risk. Using the G bank Sichuan Branch as an example, this paper analyzed the difficulties and deficiencies existed in its Control System for credit risk, and proved that the strategies and guidelines suggested in this paper are practical by several real SME loan examples.