Research Of The Bank Loans Problem In Private Enterprises

For the development of enterprises, capital is considered as an important power. How to get the capital source, therefore, is always an important concern. For a private enterprise, acquiring adequate capital is essential to its expansion, the introduction of advanced technology, and the promotion of its own strength. With the rapid development of Chinese economy, it also have been reflected that private enterprises play a tremendous role in the social economy. And they have become the important force for elevating the level of economic development, increasing employment and tax revenue, and maintaining social stability. Nevertheless, problems of private enterprises are also gradually exposed with their enormous development. One of the key problems is the difficulty of financing, which plagued the theorists and the practitioners.To solve the financing problem of private enterprise, both academia and practitioners have been doing active exploration. The content of their research involves financing channels, current financing status and the causes of the difficulties in financing. And based on these, many meaningful recommendations have been proposed, such as improving institutional environment and their own quality, etc. Grounded on literature review, this paper focuses the bank loan problems of private enterprises as the starting point. Selecting private companies by 2008 listed in Shanghai and Shenzhen stock market as the sample, we conduct empirical analysis regarding the influence of actual controllers’background in private listed companies to their credit availability.The first part of the article mainly elaborates the writing background, meaning, the specific structure and relevant content and so on. Why write this article, why choose this research direction, and how to study is specified.The second Part of this article specifically addresses the related concepts of private enterprise and pictures the development of the private enterprises with data in the recent years. Definition of private enterprise is a more complex issue. Specifically, we can define it in the following three ways:the first way is to define in accordance with the business entities, dividing the private enterprises into two types of state-owned and private. The second way is economic composition view outside state-running, suggesting that private enterprise refer to the general term of enterprises of various economic components excluding the state-run enterprises on behalf of the state. The third way is to scale the private economy with private sector, which is that if they are from the private sector, whether for investment or business, they are counted as private enterprises, and that as long as they obtain return and assume business risk, they also are counted as private enterprises.The second half of this part highlights the significant effect of private economy. The private economy exerts an growingly prominent role in increasing employment, creating tax revenue, exporting and generating foreign exchange etc. The private economy made great contributions to the development of the socialist market economy and socialist social stability. The main way of this part is illustrating themselves in sales revenue, quantity, labor toll, profit, export and so on. In addition to those, it is expounded with data that private enterprises play an important role in the social sector and make a contribution to maintain social stability and alleviate social contradictions.The third part of this paper mainly expounds current financing channels of the private enterprise and the status. According to sources of capital, financing can be divided into the internal financing and exogenous financing. Internal financing is the process that enterprise finds resources from the internal. The internal capital primarily comes from the retained earnings and surplus reserves accumulated by its own. Exogenous financing is the process that enterprise raises funds from outside. External financing is generally achieved with the financial intermediaries, including the lending between Banks and enterprises, credit between enterprises, leasing, the issue of stocks and bonds enterprise conducts in the financial markets, etc.The second half of this part illustrates and analyses the status of private enterprises with data. The primary source of funds is the owners’equity and retained earnings. That is to say, the internal financing is currently the main source of private funds. At the same time, exogenous financing is difficult for private enterprises. From the prospective of direct financing, vast majority of private enterprises cannot achieve financing through listing. For indirect financing, the situation is not optimistic.In the end of the third part analyses the causes of the difficulty of financing. These reasons incorporate not only the external environmental factors, such as poor legal environment, the unfair of administrative law enforcement and judicial supervision, the restrictions on market access, the government’s partial nonfeasance and so on, but also the factors of its own, such as enterprise’s lower management level and poor awareness of self-accumulation that leads that the internal financing cannot meet the financial needs of its own development, the irregular system construction that make the banks cannot reasonably assess the asset, viability, profitability, and prospects of the private enterprise, and therefore affect the credit rating. In addition of those, bank factors are related, for instance, the banks’credit policy is not conducive to private enterprises to obtain loans. When granting loans, the banks overemphasize the size and asset of the enterprise and profitability of the industry, while ignoring the characteristics of current smaller strength and bias toward the traditional industries of the private enterprises. Accordingly the private enterprises cannot reasonably access to credit support.The fourth part describes domestic and foreign literature on enterprise financing, and puts forward the theoretical assumptions with relevant literature, mainly including financial repression theory, credit rationing theory, financing cycle theory and relationship between banks and enterprises and relationship financing theory.This paper specifically lists related theoretical literatures on background information of the actual controller, and then does certain induction and classification for those literatures. In the basis of the combing and study of the literatures, this paper takes political identity, qualifications, age and gender of four variables as the measure of background information on the actual controllers of private enterprises, and puts forward relevant theoretical assumptions. These assumptions mainly include:that political identity of actual controllers of private listed companies the people’s political identity is positively related to private enterprise credit availability, that the higher academic qualification the actual controller gets, the stronger corporate credit availability becomes, degree and credit availability are correlated, that taking into account the female actual controller will take a more robust mood of operation, the banks biases in favor of loans to the private enterprises whose actual controller is female with safety considerations, that the age of the actual controller and private listed companies credit availability is positively correlated, that is to say, the older the actual controller is, the increasingly more conservative business strategy is adopted, and the more willing to credit the bank is.The fifth and sixth parts of this paper conduct descriptive statistical analysis on the sample involved, and based on these data, draw corresponding conclusions by empirical research.As the last part of this paper, the seventh part inductively sums up the relevant conclusions of this paper, and illustrates some defects on the article.Our research indicates:the political identity and the age of the actual controller have a positive impact on the credit availabilities for their private listed companies. The empirical results of this paper provide a new perspective for the settlement of the difficult bank loans of private enterprises. Specifically, first, the conclusions of this paper display that the political identity of the actual controller contributes to the credit availability of private enterprises. As the actual controller of private enterprises, he is not only concerned the profits and sales, but also should actively participate in political life, offer good advice and suggestion for the social construction and economic development, and display the power of the private enterprise in the political arena. Second, this study shows that the academic qualification has a positive effect on the final access to the bank loans. Qualification is not only a symbol of diplomas, but also reflects the entrepreneur’s cognitive ability, problems solving skills and understanding capacity. As the actual controller of private enterprises, he should insist in learning and enhance studying.The major innovation point of this paper lies in the following aspect. Comparing with the previous literatures which study the problem of difficult financing of private enterprises from the perspective of the financial statement, financial indicators and other, this paper adopt a new perspective of the background information on the actual controller of private enterprises to study the problem of the bank credit of private enterprises, expanding the research directions of the credit availability. Compared to some literatures analyzing the impact of the bank credit with only one background information, this study is more representative. At the same time, researching from the perspective of the actual controller of private listed companies, this paper expands the range of background studies on senior executives of listed companiesIn general, this paper makes several opinions only from the aspect of background information. Certainly, the problem of financing difficulties of private enterprises is very complicated. Thereby, government and all sectors of society should make efforts in parties from various perspectives, including social environment, national policy, property rights, legal, finance, science and technology, etc.