Relationship Lending Of SMEs Based On The Bank Scale

SMEs play an irreplaceable role in China’s economy, particularly inpromoting the growth of economic, international trade expansion and improvingthe employment opportunities. However, the status of SME financing is notoptimistic, financing difficulties severely restrict the further development ofSMEs. In the analysis of financing difficulties causes of SMEs, the mostfundamental factor may be the information asymmetry between banks andenterprises. SMEs determine their own scale information traits, so they can notprovide transparent financing information to the bank, it finally leads banks andother credit institutions do not rend the credit aid to SMEs, it is the so-called“credit crunch”. As a financing technique, relationship lending has a richtheoretical and practical results in the United States, Japan and other countries. Itis the banks’ lending decision that based primarily on the information whichthrough maintaining long-term closed contact with the enterprises. Since thisvalue is reflected in focusing on both long-term and stable cooperative relationstransaction to obtain sufficient information to reduce adverse selection and moralhazard arising from asymmetric information, it helps banks to give credit supportto SMEs. Relationship lending has congenital advantage of it to solve thefinancing problems of SMEs, it provides a new perspective to alleviate theproblem of financing in SMEs.This paper around the financing problem of the SMEs credit, focuses onstudying the techniques of relationship lending. First, from the perspective ofbank size,elaborates the relevant theoretical results of relationship lending toSMEs, summarizes and draws on experience of developed countries in the USand Japan relationship lending; secondly, based on the theoretical relationshiplending, it conducts empirical analysis on China’s relationship lending. Sampledata included in this database comes from the GTA and the Shenzhen Stock Exchange listed on the SME board in the published financial statements of SMEs,which filters out valid sample data to meet the standards and then establishes amultiple regression model, respectively, from the size of banks and credit marketcompetition angle to analysis the SMEs, test results confirm the presence ofsmall banks advantage. Finally, according to the results of empirical analysis,this paper puts forward policy proposals which conclude companies, banks andgovernments.The results of this study show that bank hierarchy in credit market puts animportant impact on relationship lending to SMEs,the smaller size bank hasmore simple organizational structure and it can make information deliverybecome more flexible, then it powerful confirms the "small bank advantage"theory relationship lending for SMEs; secondly, SMEs credit market competitionand relationship lending are positively correlated, which indicates that when thecompetition between markets shows a low level, the bank will carry out morerelationship-based lending; when increasing the degree of competition amongbanks, the substitution effect between these two financing models will make thebanks more willing to provide the loan payment transaction; article also testspositive correlation between soft information in the enterprise and relationalSMEs lending,this indicates the corporate directors have a wider network,it willmake the stronger possibility to establish partnership between enterprises andbanks, which can effectively solve the problem of information asymmetrybetween banks and enterprises, then make the enterprises to obtain relationshiplending become more easy. Finally, according to the results of empirical analysis,from the aspect of companies, banks and government to put forward thecorresponding policy proposals.