Financing Of Small And Medium - Sized Enterprises And The Role Of Local Government

Over the past30years of opening-up and reform, Wuxi City has been sticking to the market orientation and intensifying the driving force of local governments to strengthen the collective economy and develop small and medium enterprises (SMEs). Through establishing the optimum zone for the growth of SMEs in Jiangsu Province, Wuxi City has been striving to create the external environment suitable for the development of SMEs and boost the sustainable and steady increase of SMEs. Presently, Wuxi City has over100,000SMEs which account for60%of the total economy of this city and play an increasingly important role in solving the problem of employment, optimizing the structure of economy, and promoting the transformation and updating of enterprises. However, at the same time of the rapid development of SMEs, there are more and more factors restricting their growth, especially the financing conundrum which has not been well solved and has already become the bottleneck in the development of SMEs. Therefore, in order to boost the Wuxi municipal government to further improve the financing situation of SMEs, it is realistically significant to analyze the financing situation of SMEs in Wuxi City, probe into the problems with it, put forward pertinent suggestions, locate the position of local governments in the financing process of SMEs, and specify the responsibility and mission of local governments.Taking the SMEs’ financing in Wuxi City as the research object, this dissertation puts forward pertinent suggestions after analyzing the current financing situation, the existing problems, and the ways in which the Wuxi municipal government plays an effective role in the financing process of SMEs. Through studying the domestic and overseas theories on the financing of SMEs, this dissertation elaborates the necessity and feasibility of answering the conundrum of SMEs’ financing. Through studying the practice of overseas governments and the developed regions in our country in solving the SMEs’ financing problem, this dissertation finds that the Wuxi municipal government has the unavoidable responsibility for promoting the financing of the local SMEs and has the capability of effectively improving the financing situation of the local SMEs with its own effort. Furthermore, based on the analysis of the domestic and overseas theories and practices of SMEs’ financing, this dissertation reviews and analyzes the current situation of and the existing problems with the SMEs’ financing in Wuxi City, and then puts forward corresponding measures on how the Wuxi municipal government promotes the SMEs’ financing.Focusing its attention on analyzing the problems with the SMEs’ financing in Wuxi City and the reasons for them, this dissertation discovers that many problems exist in the SMEs’financing process in Wuxi City such as narrow financing channel, weak guarantee ability, inadequate financial innovation, insufficient governmental support and imperfect credit system. On such basis, this dissertation proposes five suggestions on how the Wuxi municipal government promotes the financing of local SMEs, that is,(1) building policy financing channels,(2) creating a favorable credit environment,(3) perfecting the financing guarantee system,(4) Guiding private capital to participate in SME financing (5) regulating the local governments’financing platform.