The Effect Of Competition In The Banking Market To The Loans Availability Of SMEs

Our society has been focused great concern on the development of SMEs, because SMEs play a pivotal role in the economic prosperity, increase employment and other aspects. However, the development of SMEs has encountered a shortage of funds bottlenecks.Survival and development of SMEs need support of bank lending.Therefore, from the perspective of competition in the banking market to explore solutions to SME lending difficult problem is very necessary. This paper studies the previous theory, constructing mathematical model to analyze the competition of foreign banks entering the market caused by changes in the Chinese banking market competition and a variety of different ownership structures of banks lending is also a task of this article.With foreign banks into China, China’s banking sector intensified market competition, thus have a certain impact to improve the availability of loans to SMEs. The use of PR measurement model to measure H statistic, while building the number of foreign bank assets accounted for and the number of foreign banking institutions accounted for two different models, empirical analysis of competition in the banking market changes in foreign banks into China caused by the availability of loans to SMEs resistance of. The results showed that the number of regression coefficients assets of foreign banks and foreign banks accounted for the proportion of the number of institutions are significant.This shows that in the premise of risk control appropriate to relax the threshold for foreign banks, can increase the monetary supply, thereby improving SME loan availability.According to the different nature of ownership or size, China’s banking sector can be divided into state-owned banks, joint-stock commercial banks, city commercial banks and rural commercial banks, these four categories of bank loans to SMEs as suppliers of their asset size ratio changes affecting SME loan availability. This paper uses data from1997to2012, the use of empirical measurement methods OLS analysis, the change in shareholding commercial banks with loans to SMEs and rural commercial bank assets in market share may have positive correlation, while the state-owned commercial banks and city commercial banks changes in assets and market share of SME loans can be obtained negative correlation.Based on the above analysis, due to asymmetric information theory, foreign bank loans advanced technology, low-cost access to information and advanced management capabilities can well provide loans to SMEs in China. Meanwhile, the small banks is more suitable to carry out the relational credit, therefore, to improve the availability of loans to SMEs, the need to develop small and medium banks, such as joint-stock banks, rural commercial banks, rural cooperative banks as well as a variety of new rural financial institutions, improve the urban commercial banks corporate governance structure, increase financial supply, improve the degree of market competition and achieve the diversification of the banking market and hierarchy, and ultimately solve the problem of SME loans.