A Feasibility Study On The Issue Of The Bond Financing In Small And Medium Enterprises In China

In recent years, small and medium enterprises(SMEs) have a rapid growth anddevelopment, which created expanding economy and stimulated the desire for assets structureadjustment and transformation. The development of SMEs make the great contribution to thenational economic development, and also establish the base for improving the people’slivelihood and social harmony, but it also face a series of problems in its development process,one of the main obstacles is funding. With warming of the financing problems of SMEs,coupled with speeding up the pace of building the multi-level capital market system, andcoming up with the positive development of the bond market requirements. However, thereare still many problems in issuing bonds for SMEs from the current actual situation, it isnecessary to further study. Therefore, to study the feasibility of the small and SMEs’ bondsfinancing, can make a great significance for SMEs’ bond financing channels.At present, many domestic and foreign scholars have done a lot of research on bondfinancing for SMEs, and produced a series of worthwhile use of results. But these studies,mainly on comparative analysis of corporate bond financing with equity financing and bankloans from the macro, to exploring the problem which kind of the market environment can dothe best for the SMEs to issuing bonds for its financing needs, but the feasibility of SMEsfinancing bonds is rarely studyed especially from the viewpoint of a solvency. Bond financingis a means of debt financing, the key factor of the success in the bond financing is the abilityto repay the debt in full and on schedule. The repayment of debt tends to realize in cash, thestock of cash, cash flow can explain the solvency of the enterprise, thus determine theenterprise’s size of the debt, so the enterprise can payback the debt under the correspondingsize of the debt, that is to say, it is feasible for the enterprise to issue the bond financing.This study main ues the specification argumentation and comparative analysis, firstly,combing the theory of domestic and foreign bond financing for SMEs, as a theoretical basis ofthis study. Then analyzed bond financing situation of SMEs in China, introduce three kind ofnew SMEs bond financing formats: SMEs collective bonds, SMEs short-term financing bills,SMEs collective notes. and presenting the shortcomings of current bond market developmentof SMEs:(1) high threshold of issuing bond,(2) lack of market-oriented operation,participating subjects enthusiasm is not high,(3) lack of effective market regulation,(4) thecredit rating system is not perfect, guarantee mechanisms have no practical results,(5) poormanagement of SMEs. Then expounded the development and successful experience of theUnited States, Japan and South Korea bond market. Then from the economic significance ofcash flow, revealed the significance of cash stocks and cash flow for the solvency, it show thatmovement of capital wich based by cash stocks and cash flow can reflects the solvency ofenterprises, corporate debt solvency determine size, and concluded: As long as the turnovercycle of corporate cash flow and cash payment cycle consistent, the amount of a stock of cashgreater or equal to the amount to be repaid point in time, this SME has the debt payingability,Bonds under the corresponding scale debt financing is feasible, and should not belimited to the size of small and medium enterprise for the issuance of bonds. Finally,combined with China’s actual capital market developments, learn from foreign advancedexperience of successful capital market bond financing, related countermeasures of bond financing for improvements of SMEs in order to broaden the financing channels for SMEs,promote the development of the bond market, and solve the financing problems of SMEs.