The Study On Co-operation Relationship Of Credit Guaranty Institution And Associated Bank

The financing difficulty of Small and Medium Enterprises (SMEs) is one problem that China needs to solve for its economic development. At present, the main financing way of SMEs is bank financing. Due to poor internal management, distort financial information, low-quality product and technology, low-effective property and high risk financing, it is difficult for them to get bank loans. This paper tries to study deeply the current situation of co-operation of credit guaranty institution and associated bank. To solve the financing question of SMEs and advance the development of SMEs, the credit guaranty institution should establish the strategic partnership with the bank,.There are six parts besides the conclusion. Firstly, we introduce the background and significance of the topic. Then we use the theory of information asymmetry, the theory of risk shift and transaction expense theory to provide the rational basis for the existence of the co-operation of credit guaranty institution and bank. Because of problems of credit guaranty institution and banks, their cooperation is not very smooth. Thirdly, through introducing the experience of Japanese and America, we should consummate the credit guarantee system.Then the article analyzes the premise of the co-operation and take the Liuyang Gold Credit Guaranty Co.Ltd as an example to prove that credit guaranty institution should establish the strategic partnership with the associated bank. Lastly, we put forward the concrete suggestions on their co-operation in five aspects.