Research On The Relationship Between Government Arrangement And SMEs Finance In The Perspective Of Commercial Banking

Capital is the essential motivation for the development of an enterprise. In China, the development of the medium and small enterprises (SMEs) is facing the problem of capital shortage, so it's very important to possess a good finance source for the development of SMEs. However, severe information asymmetry, adverse selection and moral hazard between the bank and the SMEs drastically hinder the credit relations between banks and enterprises, esp., SMEs. In recent years, our government has increased the support to the SMEs. Many policies have been introduced to support their development and solve their difficulty of financing. One of the policies is to relieve the problem of information asymmetry between commercial banks and the SMEs by the way of credit-adding through government arrangement. This thesis tries to find the key points of commercial banks' service to SMEs and propose corresponding policies from the point of financing system construction and financial products innovation for the SMEs. The main points of this thesis are listed in the following.In terms of SMEs development, the thesis will firstly study the current situation of financing and the cause to the difficulty of capital raising for the SMEs; secondly, how will the SMEs get out of the trouble of simple indirect financing and direct financing difficulty; thirdly, in order to improve the financing environment and enlarge financing channel, the SMEs ought to lay emphasis on their credit basis. Only do the SMEs firstly pass the barrier of credit can they truly solve the difficulty of financing.As for the bank, it should focus on the following points:firstly, how to solve the great business and cost risks of the SMEs; secondly, how to increase the financial support to the SMEs; thirdly, making great efforts to change the current organizational structure and then render better financial service for the SMEs; fourthly, improving the abilities of financial risk identification and risk control; lastly, exploring financing innovational products which are fit for the features of SMEs.In terms of credit-adding through government arrangement, the government should use available resources to intervene and support SMEs financing, build a perfect credit guarantee system for the SMEs and then relieve their problem of "market failure" during financing.Due to "market failure", the SMEs usually can not get balanced financial resources and it's also hard for them to expand with the help of external financing in completely free market economy. However, the SME has an important strategic location in the national economy. The development of the SMEs will not only affect the quality of economic operation and social stability, but also the achievement of national economy and social objectives.In the sight of commercial banks, this thesis tries to analyze and study how to solve the problem of SMEs financing difficulty through the coordination and cooperation between the government, the bank and the SMEs. Meanwhile, a conclusion has been drawn through case studies and business practice of the commercial banks, i.e., financial products innovation and innovational products pricing are the main tasks for study in the field of financial engineering. Commercial banks should study financial products innovation and then relieve the difficulty of SMEs financing in actual business operation. This thesis has put forward a new pattern of financial products innovation, that is, through the division of financial engineering, risk restructuring and the development of new financial products, building a new pattern of cash flow and circulation on the basis of credit, with the effects of enhancing the capital turnover between commercial banks and the SMEs and then promote the credit system and capital circulation of the whole society.