The Study Of The Solutions In Financing Predicament Of The Small And Medium-Sized Enterprises In China

In China, there are over 40 million Small and Medium-sized Enterprises (SME) and individual traders with an employment of 75% labor force both from town and rural areas. Over 60% GDP and 50% revenue are from their contribution; meanwhile, they own 65% innovation patent rights and 80% product development. From the above figures, it is obvious that SME plays a vitally important role in the part of economic growth, advance of science and technology, creation of jobs, enlargement of revenue and etc. Nevertheless, the financing difficulty problem which SME are facing with during development has become a fatal element that impeding its growth, cause SME can only get financing from bank among all financing channels. With the changing of financial environment in China, the operation environment for commercial banks is facing unprecedented stress. Interest Rate Liberalization is cutting down the profits for banks, and meanwhile, more and more enterprises directly finance by equity or debt financing instead of indirect from bank. The operating revenue is decreasing, however, the credit concentration risks are increasing. All problems above are influencing sustainable development ability of bank in future. Thus it is of great important to intensify the research for SME, to accelerate the loan structure reform, to increase the proportion of financing business for SME. It is not only challenges, but also opportunities either for the healthy rapid development for bank, or to solve the financing problems for SME, even for the transformation of china economic structure adjustment and economic growth mode.This paper is divided into six parts. The first part is about the background and meaning of paper choosing, the basic research theory and methods, and the process and content of the research. The second part is an overview for SME in china and the financing situation and difficulty for bank. In the third part, it analyzes the correlation theory about the financing difficulty for SME. In the fourth part, X Bank is taken as an example to illustrate the cause of financing difficulty for SME. In the fifth part, puts forward a solution in seven parts for commercial bank, which are open minding, setting SME monopoly institutions, product creation, establishing credit rating system, optimizing accreditation process, strengthen management after loan and risk warning, and improving the infusion and commitment mechanism. The sixth part is conclusion. In this paper, it applies several analyze methods, including positive analysis, normative analysis, comparative analysis and case analysis. It begins with the general situation for the development of SME, and then it introduces its definition, financing channels, financing features, the problems during bank financing, and causes for those problems. In the theory part, it mainly discusses the SME equity-capital financing gap theory, SME financing structure theory, information asymmetry theory, credit rationing theory, and size-match theory. With these theories, this paper analyzes the reasons of bank financing difficulty for SME both in theory and in the Tianjin Bank, and puts forward specific aim solutions.