A Study Of Small And Medium Sized Enterprises Financing Structure And Obstacles

After opening, small and medium sized enterprises (SMEs) play an important role in dispersion economic risk and wave, deepen system reformation, and perfected market system in China. But SMEs usually face finance restriction for their small scale, high management risk and low credit grade during their development. On the base of capital structure theories and related researches, this paper empirically analyses financing structure and obstacles through surveys and questionnaire of SMEs. According to the empirical results the paper studies financing path with ways of a case and system analysis. It is very significant to promote our social and economy development.Under the frame of financing theories, this paper dissects the financing pattern and structure of SMEs in their various development stages, and empirically analyses firms financing structure and its affecting factors through surveys and questionnaire of SMEs in Wujiang and Changshu in Jiangsu province. Using firm-level data on firm borrowings, the main factors of financing obstacles are analyses from three angles, for the feature of SMEs external financing mainly dependent on bank loan, factors of credit availability are studies. According to above research conclusions, a varied financing system should be built and perfect to resolve financing problem effectively. After comprehensive analysis of financing paths, the paper discusses the effectiveness of local small bank and venture capital system to the debt and rights financing problem, and finally proposes some advises. The research contents of this paper include four aspects:Part 1: Generally analysis of SMEs development and finance problem. The content expounds the important role of SMEs in economics development in every country, their own organizational structure and management feature. With survey data of People's Republic of China and Jiangsu statistics yearbooks, it analyses SMEs development and financing present condition in China and Jiangsu ,which is the realistic background of this research.Part 2: Study of SMEs financing structure. Using the data of surveys and questionnaire of SMEs in Wujiang and Changshu in Jiangsu province, the paper empirically tests the financing structure and their change under the theory frame of the financial growth cycle, regression analyses the effect factors of financing decision. This part explores SMEs financing origin structure and its questions, which providing foundations for perfect financing structure. Part 3: Study of SMEs financing obstacles. This content analyses finance gap of SMEs and its effect to their management and development. The main factors of financing obstacles are analyses from three angles with the method of Principal Component Analysis. Further more it regression analyses factors of credit availability from commercial bank to provide direct basis for external debt finance problem.Part 4: The path choice of SMEs financing. In the light of above research conclusion, the perfect financing system includes rights financing and debt one. In the choice of debt finance, this part discusses the effectiveness of local small bank to the debt financing problem base on Changshu rural commercial bank case. In the choice of rights finance, it centers on the analysis of the effectiveness of venture capital system to the rights financing problem with trust-agent theory.From studying we find some conclusions. The majority SMEs in Wujiang and Changshu are privately, young, micro, limited liability in organization, simple rights structure, and high ability of profit. They prefer to internal financing and mainly depend on own fund accumulation in rights finance; in external finance, mainly relies on debt finance especially short liquidity loan, lack of various financing path, especially capital market. Though the financing structure and their change law is inconsistent with the financial growth cycle, it is different between China and the Unite State of America. The path of SMEs stock and debt finance is too single in China, and credit restriction during firms initial and growth in China is more severe than USA especially fixed asset loan. The factors affecting financing decision are firms scale, age, ability of profit, and aims of owner, avoiding risk and failure as well.SMEs finance gap mainly centers on short of liquidity fund, moreover it is difficult to acquire medium and long credit. There are three aspects of SMEs financing obstacles, in SMEs they are profit, credit, management risk and level, and scale; in middle opinion they are fund cost, relationship between firms and bank, financing path; in macro they are credit policy which is more sensitive to SMEs than big enterprises, industry policy, and macro economic institution.Finally, according to the impact of finance structure and obstacles, the paper suggests that a various finance system should be built and perfect, provides some advice for SMEs, policy, law and conditions.