Community Banks Advantage Analysis Based On The Industrial Community Banks In China

The Chinese banking industry has faced the following challenges for a long time:inefficient structure of the banking system, low percentage of small Commercial Banks, and severely competition in banks with similar products and services. Such banking system directly results in some problems about the financing of small and medium enterprises. Community Bank, a new type of bank branch, locate on a basic of the target customers--mall and medium enterprises, and utilize the close distances to get soft information and realize risks,then grant relationship loans.This article supports the conclusion by analyzing of the causes and advantages based on the review of related literature both at home and abroad:First, According to labor specialization division theory, specialization based on scales exists in the current financial market; according to the theory of relationship lending, asymmetric information exists in loan market based on the problem of adverse selection. But Community Banks can collect the "soft information" with long-term cooperation, and reduce the degree of lack of information to control the loan risk; at last, comparing with other financing approaches, Community Banks own inherent advantages in solving the problem of small and medium enterprises financing.This report analyzes a case that Industrial Bank issued loans to WX furniture factory with analyzing the hard information (financial information, asset information, credit rating information) and soft information for this case, then highlights "soft information" loan is also feasible. And giving the history and status of small and medium-sized commercial Banks, the report presents that it is the optimal promotion entity for Community Bank’s mode. Lastly, by following the theoretical and practical principles and comprehensively analyzing the characteristics of community banks, this report concludes that Community Bank is the optimal mode to expand the market shares and contribute to the development of small and medium-sized enterprises.