| The small and medium-sized enterprises (known as SMEs) are developing enormously since the reforming and opening-up policy was enforced over 30 years ago. They have become an important part of national economy in China. Their development has gained great attention from all the society because their growing significance in promoting the economic development, expanding employment, advancing technological progress, creating wealth and so forth. Currently, the financing method that mainly adopted by those enterprises is indirect financing, mostly bank credit. However, the traditional credit products, business model and risk control model do not suit SMEs appropriately for their requirement for fund. Under this circumstance, it has the realistic significance to study the credit financing for SMEs. The former studies on this project focus on theoretical explanation, reason analysis and strategy study; there is little research on the credit financing products and creative services for those SMEs. This became a starting point.The theoretical structure of this essay is composed by three parts:enterprise financing theory, financial innovation theory, and review of SMEs'financing. In the first two parts, it introduces the main theories of enterprise financing and financial innovation; in the third part, it summarizes the research findings of SMEs'financing in China and other countries. Firstly, two common conditions that most of SMEs are facing:the poor ability of financing lies in themselves, and banks are not willing to offer a loan. Through those, elaborating the difficulty in financing as the realistic problem for SMEs. Secondly, it goes deeply to analysis the reasons. There are both internal and external causes. Institutional deficiencies, nonstandard management, low credit, serious loss of honest behavior, difficulty in mortgage guarantee are regarded as internal causes; The nationalized banks tend to state-owned enterprises, the small and medium-sized banks that have the potential to support SMEs are in favor of big and medium enterprises. Meanwhile, the government hasn't established a proper system for SMEs so far; all of those become external causes. The information asymmetry between fund provider and demander is the root cause resulting in SMEs'financing dilemma.Credit products are not designed for SMEs and big enterprises separately in most of the Chinese banks long time ago. They use the same evaluation system and approval process, which can not satisfy the condition and fund requirement of SMEs. These years, banks enter into a new round of product innovation competition. Among them, the city commercial banks and equity banks are in the leading position. All those innovation are tend to solve two problems effectively:information asymmetry and reduction of transaction cost. The "Bank & Enterprise Association" mode of Qilu Bank and "Technical Branch" mode in Weihai City testified that any creativity on those two aspects will be of value. I believe to solve information asymmetry and reduce transaction cost will be the tendency in credit financing innovation. Banks should promote new products or services on those two perspectives to help SMEs out.Due to space limitations, the essay doesn't dig out the management of financing requirement analysis in SMEs, even the financing products design hasn't be specified here. Further studies could be followed for many banks will definitely face those problems. |
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