Research On Smes Financing Via Nongovernmental Finance In China

With the continuous development of China’s SMEs(Small and Medium Enterprises)which occupies a decisive position in her economic development, capital needs keeps onincreasing. But for various reasons, SMEs is having a hard time raising finance from theformal financial market and this restricted the development these enterprises to a great extent.Meanwhile, nongovernmental finance has been under the spotlight for a long time, the volumeof form of which is large enough to cover the whole country. Currently, Chinese governmenthad authorized the establishment of Wenzhou financial reform experimental plot andaccelerated the process of legislation on relevant issues, an expedite development ofnongovernmental finance is firmly on the agenda. Under such a tendency, SMEs couldtherefore choose nongovernmental finance as a channel for raising fund, and proceduresshould be taken to specify the nongovernment finance.This thesis drew forth the reality basis of raising fund via nongovernmental finance andthe potential problems existed in such process by analyzing the development situation ofChina’s SMEs and nongovernmental finance in the first place. Later, the positive and negativeeffect of raising fund via nongovernmental finance are illustrated by Game Theory, positiveeffects of nongovernmental finance on SMEs are elaborated by studying the case of RongtongSmall Loan Corporation rendering finance to local SMEs in Cixi City, and the negative effectsby studying the case of SMEs owner abscondence caused by folk financial crisis. Based onnongovernmental financing, the author concludes the thesis by proposing two suggestions torelieve the financing problem for SMEs, one is to set up small and medium private financialinstitutes, the other one is to introduce "guarantee pool" model. It is also suggested thatregulatory authorities should strengthen its regulation on nongovernmental finance, improveand perfect the relevant risk system and credit guaranty system. Only in this way can thefinancing and development of SMEs be promoted.