Design Of Credit Risk Compensation Mechanism For Micro And Small-Sized Enterprises In Hunan Province

Micro and small-sized enterprises are a critical component of the foundation upon which China's economic growth and social development take place, as well as an important channel through which jobs are created and domestic wealth is accumulated. The development of micro and small-sized enterprises is something of national significance. However, while micro and small-sized enterprises are contributing heavily to China's economic growth, they face various difficulties, the primary one being the financing difficulty, which has long been restricting micro and small-sized enterprises from fully developing. The root of this problem lies in the lack of a well-designed credit risk compensation mechanism. This thesis tries to fill in this blank by putting forward a consummate credit risk compensation mechanism for the Micro and small-sized enterprises in Hunan Province, based on a thorough research on their current situation.A theoretical analysis on the cause of micro and small-sized enterprises' financing difficulties is conducted first in the thesis and an interpretation of credit risk compensation mechanism is made from the angles of information asymmetry, external economy, risk sharing, and resource allocation. The proof of the credit risk compensation mechanism improving availability of credits for micro and small-sized enterprises is discussed on the basis of researching their current status with economic theories. Then, the feasibility of the mechanism is deducted and interpreted from perspectives like market environment, policy environment, and self-advantages. This thesis also looks into credit risk compensation mechanism's American model, Japanese model, and German model, and chooses the most suitable for Hunan Province to learn from according to its needs. In the end, a credit risk compensation mechanism is designed for micro and small-sized enterprises in Hunan Province from the aspects of organization structure, compensation procedure, risk prevention, and supporting measures.This thesis is trying to solve the micro and small-sized enterprises'financing problem in Hunan Province and promote the growth of their overall strength and provide assistance for the development of the economic and social transformation in Hunan Province.