Research On The Small And Medium Banks And SME’s Relationship Lending

As everyone knows, small and medium-sized enterprises has made importantcontributions to our country’s sustainable economic development and social harmonyand stability, but they face difficulties in financing. On one hand, this is because of itssmall scale, high risk of operation, unsound internal management and financial system,insufficient collateral, and poor credit.On the other hand, this is because that China’sfinancial environment is not good. At present in various financing ways, bank loan isan important channel, but this channel is not smooth.This paper studies that, as a wayof bank loan, relationship lending plays a positive role in relieve financing difficultiesof small and medium enterprises, and the path of carring out relationship lending.Relationship lending originated in the west. In order to overcome the informationsymmetry, banks and enterprises esestablish a stable, closely and relatively closedtrading relationship through the long-term and multi-channel contacts. Based on theaccumulation of enterprise private information, bank identify enterprise quality, judgeloan risk, and then offer loans. Compared to the market transaction lending,relationship lending has more advantages. It can relieve financing difficulties of smalland medium-sized enterprises from three aspects, as follows, increase the enterpriseloan accessibility, reduce mortgage requirements, and enterprise financing costs.relationship lending also has the function of "incubator", it can help enterprisesthrough their financing difficult period in growth cycle. At the same time relationshiplending can brings kinds of rich rents for banks. The bank can dig out more and morehigh-quality small and medium-sized enterprises, and this is conducive to thedevelopment of the banks. Relationship lending bring the improvement of the revenuefor both banks and enterprises, this is win-win development of bank and enterprisethrough long-term repeated games. Banks and enterprises have dynamic to developeand maintain relationship lending. In our country, relationship lending has thefeasibility of implementation.How to promote relationship lending and maximize the advantage of relationshiplending in our country. In this paper, by analyzing small and medium-sized bank has acomparative advantage in SME’relationship lending, selecting the successful cases athome and abroad in developing relationship lending, and summarizes their successfulexperience, propose that small and medium-sized banks should become the subjectof implementing and promoting relationship lending.Finally, this paper puts forward the suggestion of developing SME’relationshiplending from three aspects. Firstly, small and medium-sized banks should clear theirmarket position to serve the SME, and make full use of their own advantages toestablish long-term cooperation relationship with enterprises. Secondly, the small andmedium-sized enterprises must strengthen themselves, improve quality. Finally,improve the social credit environment which is required by relationship lending, andspeed up the construction of credit information system.