Research On The Application Of Relationship Lending In SME Financing

The growth of SME (small and medium-sized enterprises) faces a financing puzzle both in developed country and developing country. Relation lending, as a split-new financing way which is according to tacit information, has become an central issue and a Difficult problem of government and economists since 1990s.This financing can help cut back the information asymmetry and cut down the transaction cost so as to solve the financing“bottleneck”of SME.The information asymmetry is a very outstanding problem in stock market and bank credit market during the transition period of economic development in China. It is very necessary to study this problem and that is why I chose this topic.Firstly, this article discusses domestic relationship lending, including the definition and the feature of relationship lending, information asymmetry and the relationship of adverse selection, moral hazard, and credit rationing with information asymmetry. Secondly, we obtain some enlightenment by analyzing and comparing the two financing modes of the United States and Japan. Thirdly, by way of introducing and analyzing the status of SME financing, this paper concludes that relationship lending is an effective way to solve the financing“bottleneck”of SME. Finally, a success story of applying relationship lending in SME of China proves that relationship lending can solve the financing problem of SME, in faith. And, through analyzing the social culture, economic conditions and related systems of Fusong, this paper obtain results that SME of Fusong feasibility make use of relationship lending.