Influence Of The Size Of Banks To SME Loans

SMEs(small and medium enterprises) play an increasingly important role in China’s economic growth, especially in the current situation where our country is facing downward pressure on the economy. So releasing the vitality of small and medium enterprises will help the economy running smoothly. Considering the macroeconomic situation, since November 2014, the central bank lowered the reserve ratio and interest rates three times, which further promotes social financing costs down. This not only expands opportunities for external financing of SMEs, but also enhances the capacity of banks services to SMEs as well as improving their profitability. Therefore, in this situation, the research on the relationship between banking structure and SME loans has more practical significance. About this question, the academic circles have not formed a consensus view. Mainstream view on SME loans is that "small bank advantage" exits, which means small banks are more suitable on SME loans than large banks; Another view is that small banks have no obvious advantage. Although many foreign empirical research has been done, domestic empirical research is still too little. This paper attempts to expand empirical research on the situation of SMEs, and to make policy recommendations for the development of small banks.The first part is the introduction. Combined with the current situation of SME financing, it introduces the topic causes and significance, while gives a brief introduction on the research method. Besides, it makes a note of the innovations of this paper and shortcomings. The second part gives the classification of lending technology. And on the basis of analysis on banking industry, it made a further literature sort. The third part is theoretical analysis. Firstly, it analyses relationship lending from the perspective of information production and delivery, and compares the advantages of large banks and small banks. Secondly, related to the organization theory, through seeking optimal dispersion point in the relationship lending, it gives the conclusion that small banks are more suitable for relationship lending and large banks are more suitable for transactions-based lending. The fourth part conducts empirical research based on 2008--2014 listed SMEs in China, then it finds that bank’s state-owned background has negative impact on relationship lending while the size of bank is opposite.This innovation is that this paper does empirical analysis based on loan data of listed SMEs, and compare the performance between large banks and small banks. Beside, on the proxy variable of bank-firm relationship, we did not follow the traditional practices as to adopt the controversial relationship lasting time, but combine the number of successful loans and loan amount. However, because of my limited level, it has not yet been discussed when corporate loans occur in multiple bank relationship. What’s more, the design of model and control variables may be further improved.