Bank Size,Credit Advantages And Loan Support For Small And Micro Enterprises

As we all know,small and middle enterprises,which are usually called SMEs,are playing a very important role in the development of national economy.However,these enterprises have been faced with serious financing problems for a long time.In academic field,foreign researchers in 1990 s have found that small banks took an obvious advantage in offering loans to the small business,according to which,they proposed a theory called “small bank advantage”.After that,no matter in academic research or economic policy,China has accepted this theory before examining it.Based on this theory,the financing problem of small business was connected with the development of small and middle banks.However,at the present stage of China,on one hand,the financing problem of small business is still serious;on the other hand,small business is treated differentially when it comes to financing,not only in large banks but also in many small and middle banks.Especially,there exists a special group in SMEs,which is called “small and micro enterprises”.Compared to the middle size enterprises,this group is confronted with a more serious and difficult financing problem.It seems that the traditional theory hasn't matched the reality well,which has offered this paper some research space.This paper makes some further research on the bank size and small and micro enterprises' financing problem.Firstly,we have reviewed some theories about bank size and small business financing,and we also make a detailed description on the fact of financing demand of small and micro business.At the same time,we also investigate the operation of small and micro credit loans of different sized banks.Then,the support efficiency of different sized banks to small and micro enterprises is measured by using a DEA-Tobit two stage model.The result has shown there is no clear advantage for small and middle banks in the area of offering loans to small business.We conclude the influences which can affect the credit support efficiency of different sized banks to small and micro enterprises by using a Tobit regression.The result has showed that the asset,innovation,architecture of banks can obviously influence its ability to support small and micro enterprises.Obviously,“small bank advantage” is too partial.Different sized banks have different advantages in offering loans to small business,not only in the aspect of information,but also in asset,technology,architecture and so on.Considering all these factors,the result shows that there is no obvious advantage for the small sized banks in offering loans to small business.According to this empirical result,a further research is made on how to improve the credit amount for small and micro enterprises.Based on the different aspects of advantage in different sized banks,we establish a model of small business credit market.By the method of dynamic evolution,the cross border of competition are analyzed in serving small and micro enterprises between small and middle banks and large banks.The result shows that in the long run,when the two sized banks share the same credit cost,the low-risk small and micro enterprises market will be occupied with small banks,while the two sized banks will share the high –risk small business market.According to this model,there are different strategies for different sized banks in the small and micro enterprises credit market.Lastly,for the effective run of the small and micro enterprises credit market,we propose a series of political suggestions to improve the competition of small and micro enterprises credit market.