The Legal Regulation Of Private Finance For SMEs

The financing problems of small and medium enterprises (SME) are increasingly drawing the society’s attentions, which act as key issues of China’s developments as well. As for the failure in solutions, it relates to the China’s inhibitory financial policies which regard finance as a tool of state-owned economy, the incomplete market-based environments where formal financial institutions pursuit profit maximization as market entities, and the lacks of competitive motivations as well as competitors under the protections of the China’s inhibitory financial policies. Additionally, all reasons are well-known by public and the government has raised policies to give assistance to SME and solve their financing problems. However, the measures have failed to achieve perfect success. Practically, SME barely finance well as expectation under formal financial systems and thus seek funds from informal ones. As the outcome, the informal finance named folk finance enjoys its rapid expansion, whereas the internal imperfections of folk credits accumulate the raising financial risks. Consequently, the cooperation of practical experience and balance views which combine the straitened circumstances of SME and relevant legislations is definitely in need to give solutions to’Macmillan Gap’.This essay is divided into five parts:The first part gives the introduction. It states the research methods and gives a guideline of theories about SME’s folk finance following the clue of developments.The second part summarizes the problems from SME’s folk finance. Initially the definition and explanation of SME would be introduced. Furthermore the current situations and operation methods of folk finance would be discussed. In addition, the analyses of main reason for the cooperation between SME and the folk finance would be emphasized.The third part states the researches about SME’s folk finance. Chengdu City would be taken as a practical instance. The research in Chengdu City includes the development of SME and the folk finance there and intends to analyze the influence of folk finance to SMEThe fourth part discusses the risks arising from folk finance and the local experiences of risk controls. Based on the practical researches, the general risk of SME’s folk finance would be further explained. Those are specifically concentrated on cover China’s social managements, imperfections of relevant legislation on SME’s folk finance, differentiation of governance concepts and the coexistences of multiple departments.The fifth part focuses on the management system design of risk control related to SME’s folk finance. This part indicates further possibilities of development under current management system following the former researches and essays in addition to the value orientation built on both domestic and global relevant management systems. In summary, it pursuits to achieve the rational services by folk finance to SME as well as the reduction of both legal and ethical risks under the assumption that no absolute re-design of management system is necessary. When it comes to the management of folk finance, the discovery of people’s legislations in need is preferred rather other the creativity of legislations out of need.