Research On Effectiveness And Risk Of City Commercial Banks' Loans To Small And Middle Size Enterprise(SMEs)

There are 112 city commercial banks being formed in China today. Their reform and development has become a key issue of Chinese banking system reform and development. As we know the main customer base of city commercial banks is the small and middle size enterprises (SMEs), It is the city commercial banks'development need to provide credit financing to SMEs.However compared to large size enterprises, loans to SMEs are more information non-symmetric, smaller in sum, more emergent and frequent, which increase the banks'cost of inspection and supervision and decrease their interest in generating loans to SMEs. Upon this when implementing credit control and risk management, city commercial banks have to follow the rules of risk management in one hand, and adapt to SMEs operation uniqueness in another.Topic selected and composition of this research paper were basing on economics and finance theories and methods. The author taking advantages of his working condition investigated the city commercial banks in Liuzhou City. Directing at banks and enterprises of their hopes and needs, and real credit financing cases, from a different point of view, the author analyzed the needs and risks of SMEs credit financing, studied the risks and effectiveness it presented to city commercial banks, and finally proposed suggestions on city commercial banks'risk management in financing the SMEs.The basic fact we see during the investigation is that, the non-performing loans (NPL) ratio of city commercial banks and the city's fiscal income level is in a negative correlation, whereas the relationship between the former and the quality of enterprises is in a positive correlation. It is necessary to change the preferred orientation of providing loans to large size state-owned enterprises, as well as to increase loans to SMEs.　This paper reviewed the development of the classic theories about credit risk management. By comparing relative finance theories of the SMEs credit financing, integrating with the illustration of origin of credit risk, it analyzed the particular causes of credit risk and effectiveness respectively from the stands of SMEs and city commercial banks.　According to basic theories, this paper using the game theory, analyzed the gaming...