Function Of Government In SME Financing

With the development of the economy,SMEs of China is showing us a vigoroussituation.They play a key role in promoting the overall progress of ourcountry.Becoming more and more important for us, SMEs has played an irreplaceablerole in increasing employment, maintaining the momentum,innovating technology andadjusting the economic structure.But they are suffering unequal treatment on finance，although they have contributed so much to the society.Financing difficulties havebecame an important factor on restricting the development of SMEs. How to solve theproblem of financing SMEs is an urgent problem which should to be solved at once.In fact,the problem of financing SMEs is a performance of “market failure”.Inthis,the government should display his function through the way to achieve financialresources reallocation and ease the financing difficulties of the situation。This article is based on the perspective of government functions to study thefinancing problems of SMEs. Specifically, the author first discusses the reasons forSMEs financing difficulties,including the factors found from themselves and the defectsof governmental function. then the article points the theoretical basis of governmentparticipating in SME financing. The ideas of market failure and quasi-public goodsare theoretical basis. Learning from typical practice in United States, Japan andGermany these three representative countries, this article proposed what thegovernment should to resolve SME financing difficulty. First,the government shouldImprove the structure for supporting the development of SME.Second, guide SMEs howto be bigger and stronger.Third,incubate good external condition,such as expanding thefinancing source.,enhancing the construction of credit、law and guarantee system.