Research On Small And Micro Enterprises’ Credit Availability In China From Angle Of Credit Scoring Models

As an important pillar to maintain“national planning”and“livelihood”，small andmicro enterprises (abbreviated as SMEs) should receive strong support and achievedsignificant development. But its financing situation is contrast in stark to its important roleof national economy. In order to improve SMEs’ credit availability and access to financialservices，a series of policies and measures have been formulated by central and localgovernments，and financial regulatory authorities etc. Meanwhile commercial banks alsoneed to gradually adjust their credit structures and increase loans to SMEs driven byexternal competitive pressures and internal intentions to achieve profit growth.Under this background，it’s helpful for improving SMEs’ credit availability to carryout this study，whose objective is to explore how to developand apply small business creditscoring (abbreviated as SBCS) model in China，based on in-depth analysis of currentsituation of and main obstacles to SMEs’credit availability，and learning from foreignpractices and experience.Firstly，this paper analyzes the current situation and reasons of low credit availabilityof Chinese SMEs. Comparisons are carried between supply and demand， that commercialbanks prefer larger enterprise to micro-enterprises，and SMEs are not satisfied with loansthey can obtained. Reasons are found by profit function analysis that discriminatorybehavior on customer choice of bank loans is based on the motive to maximize profit，sothe way to solve credit rationing is to improve profits by reduce operating costs and defaultrisk of loans to SMEs.Secondly，after introduction to the basic principles of SBCS model with example ofFair Isaac and RMA，this paper discusses effectiveness of the SBCS model to improve thecredit availability of SMEs from two aspects. One is to prove SBCS can reduce operational costs and risks using the case of Wells Fargo. The other is to prove SBCS can reduce moralhazard by dynamic game model，and contrast SMEs’ repayment decision before and afterthe use of SBCS，so as to improve the credit availability of SME’s.Thirdly，this paper answers how to implement SBCS model in china from two anglesof development and application.The basic development process and key technologies aredetailed from sample selection and variable grouping，creating and testing，implementationand adjustment，monitoring and tracking of the model. In order to demonstrate aboveprocess，this paper continues to construct a credit scoring model and a simple，operativecredit score card through logistic regression，using information statistic to screen andcoarsely group variables.Lastly， this paper summarizes experiences and lessons about how to develop andapply SBCS model in the other countries，such as United States，Japan，Italy，Russia etc.，and discuss their reference value to China. Based analyzing SBCS model’s applicationstatus，deficiencies and favorable conditions in China，suggestions are made from theperspective of commercial banks and government respectively，around changing creditconcept and cooperative development for the previous，and supplying with better dataservice and dynamic monitoring of loans to SMEs for the latter.