Study On The Regional Banks And The SMEs’ Credit Financing Plight

Since the inception of economic liberalization in 1978, China’s small and medium sized enterprises(SMEs) are under going a robust development trend and playing an important role in the national economic development. However, some problems are always in their way of development, among which financing difficulty is regarded as the most serious problem to the development of SMEs. Since the new round macro economic cycle started in 2008, the financing problem bring great troubles to the development of small businesses, which would have some effect on China’s economic stability and development.In the light of SMEs’importance to the national economy and their current difficult operation environment, it is necessary to research inio the SMEs’present financing problem and strives to find the solutions, which is also the purpose of this paper.Six parts are included in this dissertation. In the first chapter, we put forward the significance of this researeh, and set forth the subject, the structural arrangement and the main innovation.In the second chapter, we references relevant national statistics, from economic growth, employment, innovation, reform to outline the important role of SMEs in the national economy. And also studying the financing problems of SMEs in China from three aspects.In the third chapter, firstly we integrate theory with practical to illustration the financing channels of SMEs, and then we explain the lack of financing of SMEs in two ways:the funding needs of SMEs in China and China’s current banking system. Based on asymmetric information theory, principal-agent theory, motivation theory, the paper conducts an analysis on the financing problems of SMEs, and according to Chinese reality to point out the general reason which cause the SMEs’financing problems. Then point out that the development of regional banks will help ease the financing difficulties of SMEs.In the fourth chapter, we discussed the comparative advantages of regional banks above the defects of the big banks one by one, and compare the national joint-stock banks to the regional banks. The national banks and regional banks are different in organization structure, governance structure and the geographical distribution of the branehes. The latter’s greatest advantage is the managers have greater decision-making power and they are better at deal with fuzzy information. Differentiation organization and governance strueture determine different comparative advantages of banks, and they can’t replaceable by each other. Regional banks could reduce remarkably the information asymmetry of SMEs, and by using relationship lending, it can get comparative advantage to loaning of SMEs. Then we come to the conclusion that developing regional banks is the best way to ease the financing problems of SMEs. In the last two chapters, we give a brief description of the development trend of regional banks and other significant of regional banks to economic development. At last the paper brings out some suggestions of how to develop regional banks.The main contribution of this paper is that the paper detailed analyze the causes of SMEs’ financing problems combining the characteristics of SMEs in our country and the characteristics of the banking system. In the discussion of asymmetric information problem, the paper combination the credit characteristics of the two sides with two angles before and after the credit.And the paper mentioned our unique features that bankers of the state-owned Banks of China, have double Identity "officials and entrepreneurs", witch could cause double incentive.Meanwhile the enterprise organization theory are described.The most important is that when to get the right banks to slove the financing problems of SMEs, we choose from geographical rather than the division of assets.