Research Of Private Bond Risk Of SME In China

The SMEs serve as an integral part of China’s economic development，and play astrong role to the development of China’s national economy. Generally speaking， theSMEs own such characters as small scale， less investment capital, clear propertyrights, independent business operation, strong adaptability to market changes, whichcan provide more in-depth understanding to customers. Since the reform and openingup, the SMEs obtain a considerable development and gradually take up a raisingproportion in the market economy of China. In recent years, it has become anindispensable part of the development of market economy in China. With the growingnumber of the SMEs, financing problems have become increasingly prominent.Funding needs of SMEs cannot be met by indirect financing such as bank credit. Inorder to solve the financing problems of the SMEs, the State allows the SMEs tofinance by issuing debt. The SMEs private bond issue with a short term, and lack ofexperience in the capital market financing, and because the main issuing body areSMEs, there exists some risk in the bond issuance process.This paper describes the status of the development of SMEs in private bonds,including the issuance stage, the advantages and opportunities after the release, facingrisks. Secondly, through analyzing the risk in the development of foreign privateplacement bonds, beneficial reference to our country can be found. Then, empiricalanalysis is carried on the basis of the existence of private debt risk of the SMEs of ourcountry. Finally, combing with the previous studies, some policy suggestions onpreventing China’s private debt risk have put forward.In this paper, a more comprehensive analysis of systemic risk and non-systematicrisk in the process of private placement bond issue for SMEs, applying long-term useof Theorem and Z-score model to perform the empirical research on its risks.Relevant policy recommendations based on the empirical results are made. Privatebond issued in the aspect of risk prevention in enterprises should strengthen theirself-discipline, and funds obtained through bond financing should be a reasonableinvestment to improve capital efficiency; On the other hand, our country shouldincrease credit risk management of the SMEs and improve the issue bonds of auditing standards for the SMEs.