Study On The Application Of Credit Scoring To Small And Micro Enterprises' Financing

Small and micro enterprises(SMEs for short)have made great contributions to the growth of China's economic and absorbing labors,etc.However,SMEs' credit financing is always greatly limited by some issues,such as its small scale,irregular accounting information,frequent financing request,small loan amount,shortage of effective collateral,and the big cost as well as the risk facing by the bank.Many policies have been released by the government to mitigate the so-called "financing difficulty" of SMEs,and the key point to solving this problem is to cut the cost and reduce the risk of the banks when they lend to SMEs.Economic practice of foreign countries has shown that credit scoring very suitable for SMEs.It can reduce the cost of financial institutions as well as the opacity of information in SMEs so that it can significantly improve SMEs' credit availability.The study of the application of credit scoring to SMEs' credit financing can provide us some useful advices to mitigate the "financing difficulty" of SMEs.The main contents and conclusions of the study are as follows:Part 1:The effect of credit scoring to SMEs' credit availability.This article studies the effect of credit scoring to SMEs' credit availability based on the research of financial institutions.According to the statistical results and the empirical analysis,three points can be summarized:(1)Asset-based Lending and Guarantee Lending are still the main ways that SMEs get the loan although credit scoring is widely used in financial institutions;(2)Credit scoring can obviously promote SMEs'credit availability according to the regression test of total sample,and so can the relationship lending technique,however there is no clear evidence that the other three transactional lending technologies(Financial Statement Lending,Asset-based Lending&Guarantee Lending)improve SMEs' credit availability.(3)The effect of credit scoring to SMEs' credit availability varies at different kinds of financial institutions according to the further study based on the regression test of the samples divided by the type of financial institutions.The function is very significant in ICBC,ABC,BOC,BOCOM,ACBC and municipal commercial banks,but its function is not clear in other kinds of financial institutions.Part 2:The degree of the application of credit scoring in SMEs' credit financing.This article studies the degree of the application of credit scoring in SMEs' credit financing through the exploration of the relationship between credit scoring and other lending techniques based on the sampling survey of SMEs of 5 countries in Jiangsu.According to the statistical result and the empirical analysis,three points can be summarized:(1)The main lending technique used by the bank when they lend to SMEs are financial statement lending,asset-based lending,guarantee lending and credit scoring lending.Relationship lending is not widely used although it help the financial institutions get more information of SMEs.(2)Banks always use financial statement lending combined with asset-based loans,guarantee lendng or credit scoring lending when they lend to SMEs.(3)Credit scoring hasn't been thoroughly applied and currently it is complement with other lending technologies and that it can be substituted by asset-based lending and guarantee lending.Finally,to better use credit scoring to mitigate the "financing difficulty" of SMEs,the paper gives some advice to both government and financial institutions for the data collection and model development in the process of research and development of credit scoring lending technique.