A Study On Bank's Credit Strategy Of SMES In The Bank Of East Asia

In this paper, on the basis theory of MM theory, trade off theory, information asymmetry, adverse selection, moral hazard, credit rationing and relation lending, analyzed the causes why the current bank's credit strategies of the SMES generally used by most banks under leverage finance relationship between the banks and the SMES, there are needs of reduction of information asymmetry, adverse selection, moral hazard, reducing bank's credit risks of the SMES. Applying some risk-control measures including collaterals, guarantee , net assets, cancellation of credit, pricing mechanism.The statistic on financing situation of SMES reveals that main obstacles of financing of SMES were single financing channel, lack of collateral, small scale of enterprise, lack of specialized procedure and financing product for SMES, lack of guarantor. Analyzing key questions existed in financing of SMES, such as shortage of credit resources, high default, imperfect financial management system, serious arrears payments , strictly standard of credit, focusing on collateral etc.By the analysis above, discovering that current financing strategies focus on collateral, guarantee, net assets, cancellation of credit facilities, pricing mechanism, lack of selection for SMES. Specialized standard of approval and procedures were unavailable, lack of participant and supervision on the operation of SMES, the implementation of the bank's credit strategies of SMES are reducing the bank's credit risks of SMES, while increase the finance cost and difficulty, becoming obstacles of development of the SMES.Making some policy suggestions to revise current credit strategies, selecting premium customers, establishing risk-control system, correcting standard of approval procedure, making approval efficiency, innovating financing product suit for SMES by learning from others banks, according to the statistic on financing of SMES and analysis on current credit strategies.