| Nowadays, medium and small-sized enterprises(MSEs) are contributing anincreasingly important part to the world economy’s growth. Disproportionately, however,MSEs are in a very awkward position to get funds. MSEs’ financing difficulties exist notonly in the domestic,but also in foreign countries. So far, there have been numerousliterature interpreting MSEs’ financing difficulties and proposing appropriate measures toresolve both at home and abroad. The existing literature on MSEs’ financing difficultiesmostly do the analysis in the form of theoretical description, but be in lack of modeling.This paper accepts the idea that the information asymmetry between banks and firmsmainly lead to the MSEs’ financing difficulties which most scholars agree with. Nexttaking this as a basis, the paper tries to modeling the loan market between banks andfirms with a searching model. Then the paper uses this model to do a detailed analysis ofthe impact of the factors that lead to MSEs’ financing difficulties.This paper aims to analyze the specific process which lead to MSEs’ financingdifficulties. First, the paper uses the framework of Diamond (1982)’ classic searchingmodel to model the loan market between banks and firms. Second, the paper finds outbank’s lending income of the loan market model in the steady-state equilibrium, andcomes to know that high cost of bank’s lending is one of the reasons that result in firms’financing difficulties. Third, the paper analyzes the efficiency of the loan market.Considering both linear and nonlinear searching technology, the paper draws theconclusion that the loan market is inefficient. Banks tend to chase the big firms, andcapital tend to accumulate in the developed areas. Finally, the paper concludes that theestablishment of a standardized system of information disclosure and effective marketsystem will help alleviate the MSEs’ financing difficulties. |
