The Research On Credit Financing Predicament Of SMEs In China

As an important market mainstay in Chinese economy,SMEs not only promoted Chinese economic development, increased revenue income of government and provided employment opportunities,but also will play an important role in promoting the reformation and innovation of Chinese economy.However,the financial resources that SMEs occupying do not match the contribution of SMEs in the economic and social development. The shortage of funds and predicament in financing has become the biggest obstacle in the development of SMEs.Because of the high barriers to capital market entry in China and the limitations of size, although Small and Medium Enterprises Board and Growth Enterprises Market has been set up to provide financing services in recent years, the majority of SMEs still cannot get the access to finance by the direct financing market such as stock and bonds.In the case of internal financing cannot meet the funding needs and the blocking of direct financing, SMEs can rely more on indirect financing especially bank loan financing. The credit financing is defined as means of financing that an enterprise signs an agreement with financial institutions (mainly banks) to borrow a certain amount of money and give back the principal and interest in the agreed period of time. The SME credit financing of this paper refers only to small and medium enterprises’raising funds through bank loans.In our country, because of various influenced and restricted factors, SMEs credit financing presents serious imbalance in supplying and demanding.SMEs has predicament in credit financing. Since2010, the steady monetary policy has been executed,including improve the deposit reserve rate and the benchmark interest rate.The steady monetary policy finally causes credit-tightening and bank credit scale cutting down, which lead to the shortage of SMEs credit financing. Since the financial crisis, in domestic inflation and the appreciation of the renminbi pressure, SMEs are facing the rises of production cost (labor cost, raw material costs).In the cause of this, SMEs are not able to meet the large demand of money. The shortage of credit capital supply and the excessive demand of capital caused to large financing gap and also crippled the normal development of SMEs.The study on credit financing of SMEs in China has practical significance. This paper is based on the status and trouble of the SMEs, analyzing the general factors and specific causes, finally putting forward the solutions of SMEs credit financing’s difficulty. The paper includes four parts, dividing into five chapters.The first part is introduction, which mainly includes backgrounds and significance of the study, the relevant research and literature both in domestic and abroad, the method and structure of this paper, and the innovation and shortage. The second part is about theory system. This part summarizes Enterprise financing theory and SMEs credit financing theory, which lay the theoretical basis of the article. The third part contains two chapters and emphasizes on the predicament and cause of formation of the SMEs credit financing. First of all, this part introduces the current situation of SMEs financing and analyses the dilemma which persecute the development of SMEs. Large member of charter and figure is used to reveal the status and trouble in this section. Then, analyze the general influence factors from the internal factors and external factors. The internal factors is about SME itself, including its scale, ability of mortgage and operating, the relationship between SMEs and banks. This paper also empirically analyze the internal factors by taking listed SMEs in2010. The external factors contains financial control, bank credit mode and the credit system and credit guarantee system of SMEs. The last part of this paper is suggestions and solutions. All of the countermeasures are in accordance with the influence factors. Improving managerial and administrative expertise of SMEs is the basic requirement. Banks should strengthen the innovation of credit mode to provide service better. This paper put forward a new credit mode-"Credit Factory", which could improve the credit efficiency and cut down the credit cost.The innovation of this paper is as follows. Analysis of the SMEs credit financing influencing factors from the internal and external systematicly. Taking the financial data of the2010SMEs board as sample, this paper build target system and model. In addition, this paper put forward a new type of SMEs credit mode-"credit factory",which provides an effective way for banks and also solve the financing difficulties of SMEs. In this article there are still many shortcomings. It is hard to select the indications in macro factor and banking system. So this paper only making empirical research from SMEs aspect. At the same time, as the Most SMEs credit’s data is difficult to collect, this paper only use listed SMEs in China. The representative is not strong.