Research On The Innovation Of Credit Guarantee Mechanism Of Small Micro Enterprise

Small and micro enterprises (SMEs) play an important role both in economic growth and social stability. However, financing difficulty has restricted the development of small and micro enterprises. The key reason is that it is hard for SMEs to meet the requirements made by banks for loan guarantees, and lacking of motivation for commercial banks to develop SMEs’financing market also plays a very important role. How to help SMEs get the funds required for the operation and development is a difficult problem that our government has faced. Looking around the world, setting up credit guarantee system is an important approach to support SMEs’ financing. This paper attempts to explore a solution to the innovation of the SMEs’ financing difficulty by credit guarantee.The paper takes small and micro enterprises and credit guarantee as research starting points. Firstly, it is concluded that the existence of credit guarantee institutions can ease the information asymmetry problem to some degree.by constructing theoretical models through the risk transfer theory, credit rationing theory and game theory. Secondly, the paper analyses the SMEs’ financing present situation in our country and explores the reasons of financing difficulty. It finds that Small micro enterprises often lack sufficient guarantees to meet the banks’ requirements. What’s worse, there is not enough motivation for commercial banks to develop SMEs’financing market for the reason of the high unit cost of bank retail loans to SMEs. Besides, lacking of external mechanisms such as credit system is the deep reasons of the SMEs’financing problems. Thirdly, the paper summarizes the international experience of credit guarantee mechanism of the developed countries such as Japan, South Korea, and the United States. It argues that the construction of legal system, government support and good "bank-guarantee institution" relationship are important elements for credit guarantee system to support SMEs. Fourthly, the paper introduces the current credit guarantee system in our country and comparing three different kinds of guarantee mode, summarizing the deficiencies of credit guarantee system. The inequality between bank and guarantee institution, lack of risk sharing mechanism and risk control ability make guarantee industry more unpowered to service small micro enterprises. Finally, combining the above analysis, the paper proposed our country small micro enterprise credit guarantee mechanism innovation path, namely, to establish provincial SMEs’financial guarantee platform. It creates a win-win situation among government, enterprises and banks through building the mutual checks and balances operating mechanism.The paper argues that only by building credit rating index system and improving the risk compensation mechanism that the platform can have a better operation. In view of this, the paper puts forward the initial conception and operational suggestions, which are helpful to credit guarantee system which can promote the development of SMEs.The paper is devoted to the society to know the small and micro businesses’ situation in order to help the credit guarantee system’s status. It will be better if the ideas of provincial small micro financial guarantee platform can provide an inspired way to solve the financing problem of small and micro businesses, even to promote the healthy development of the national economy.