Innovation For SMEs Financing System

Small and medium-size enterprises are important part of the national economic and socialdevelopment in Xinjiang, which play an irreplaceable role in promoting leapfrog development in Xinjiang.But there are still a large number of problems to be solved among the development, one of which is thefinancing problem. As to the plight of formal financing in Xinjiang faced by SMEs in the current financingsystem, we comprehensively expound the phenomenon and discuss the important role of informal financingin providing SMEs funds to promote them development, and then use econometric models to analyze thekey factors which affect SMEs to access the formal financing from the bank. It is these key factors that leadto the current financing difficulties of SMEs in Xinjiang, forcing the SMEs have no choice but to turn tothe informal financing. These key factors have become the obstacles for formal financing of SMEs, whichlies in the flaw of the bank financing system, of which commercial banks are the core. So in this paper,from the point of the financing system, we deeply analyze the reasons of the plight of SMEs formalfinancing, including bank ownership and the loan funds scale advantages preferences; closing on bankloans permissions; imperfect direct financing system; lacking of the informal financing policy for SMEs inthe policies of the current financing system, and so on. At the same time, this paper has also furtherclarified that informal financing for SMEs in Xinjiang has good adaptability. By supervising and guidingreasonably, the informal financing can become an effective complement to the current rigid bank financingsystem.In summary, to improve the existing formal financing system, our country and Xinjiang Governmentshould make the informal financing standardized, legalized and institutionalized as soon as possible. Onthe one hand, facing the SMEs plight of formal financing, informal financing can give full play toflexibility and adaptability. On the other hand, the legalization for informal financing can also make itselfbecome "ground economy " and accept the supervision of the government agency for financial regulation,which contribute to avoid a risk of disrupting financial order and affecting social stability that mayoriginate from the informal financing nature of spontaneity and profit-driven. Finally, we propose somespecific financing policy recommendations for the development of informal financing, hoping that theserecommendations could solve the financing problems of SMEs and promote leapfrog development inXinjiang.