Analysis On The Regional Prime Direct Debt Financing Model

SMEs are an important part of the national economy, which play a significant role in promoting economic growth, increasing employment, maintaining social stability, and optimally allocating social resources. However, due to the restriction of historical factors and the special condition of our country, the difficulty of financing for SMEs has become a serious bottleneck that restricts their development, which has been a widely concern of the CPC Central Committee, the State Council, the governments at all levels and people from every industry. The government has issued a series of policies and regulations to protect the financing of small and medium enterprises and promote the normal development of SMEs, among which regional set optimal direct debt financing mode is a successful one. The successful launch of the regional set optimal direct debt financing mode helps to alleviate the plight of the financing of SMEs, bringing a new dawn to solve the financing problems of SMEs. As a new financing model, the regional set optimal direct debt financing mode is different from previous ones, meanwhile, it also has its own shortcomings and disadvantages. On the basis of comprehensive elaboration of the operation mechanism of the model, this paper analyzes the problems that may be encountered in the practice of the financing model, and proposes the corresponding countermeasures, hoping the regional set optimal direct debt financing model can have a better future.First of all, this paper introduces the background when regional set optimal direct debt financing mode was launched and the financial situation of small and medium-sized enterprise in detail. After that, I put forward several key reason why it is difficult for small and medium-sized enterprise to finance, which paves the way for the discourse of regional set optimal direct debt financing mode.Secondly, I focus on the operation mechanism of this model, and take advantage of diagrams and tables to discourse the major role of each Participating subjects such as governments, underwriting agencies and Rating companies etc in the model.Finally, this paper analyzes the problems that may be encountered in the practice of the new financing model such as paying more attention on Credit enhancements, paying less attention on risk mitigation, product pricing, building investor team, risk regulation and so on. In addition, I put forward corresponding solutions to these questions according to what I have learned and the former analysis.The main innovations of this paper lie in systematic and comprehensive study of the operation mechanism and innovations of the regional set optimal direct debt financing model and using the latest data to a comprehensive description of the mode process. Finally, I propose several issues to the model in practice on the basis of summary and analysis and put forward the corresponding countermeasures based on personal knowledge.The inadequacies of this paper is that:First, because of limited source of data and lack of government disclosure, comprehensive and accurate data can not be obtained; Second, this paper with only theoretical analysis but empirical test may be inadequate in convincing; In addition, regional set optimal direct debt financing mode has just carried on, not yet experienced the full cycle and the first bond was issued only two years ago, so the problems in the aspects of operation and repay etc. have not been exposed. I will do further study and explore for this question in my later study and work.