The Cooperative Relationship Between Credit Guarantee Institutions And Banks

Since reform and opening up, with the great changes of economic system and structure, China's SMEs have made rapid development, and it has becomes a vital force of the national economy. SMEs has played an important role in expanding employment, activating market and increasing revenue, promoting social stability and forming a rational structure of the national economy. However, due to SMEs'own weak financial strength, operational risk, lack of collateral, lack of good credit records and transparency of information, financing difficulties of SMEs has become a universal problem, constraining the development of SMEs, one of the performance is that it is very difficult for SMEs to get sufficient indirect financing from the credit market. In order to solve this problem, China started to build SME credit guarantee institutions pilot from 1992 in order to provide SMEs with adequate credit to support the loans. As the main security in guarantee activities, cooperative partnerships between credits guarantee institutions and cooperative banks is the prerequisite for the healthy development of guarantee activities. If they are in the poor relations of cooperation, the functions of guarantee institutions can not really be played, and can not be good to establish credit guarantee system to achieve the goal.This paper starts with the theoretical basis of cooperation and the status of cooperation, we analyses the problems of the cooperation of the both, and we find that at present the Collaboration has become increasingly close, but they have not yet established really strategic cooperative partnership. They have controversial on guarantee magnification, risk-sharing ratio and default debt. Therefore, on the basis of drawing on successful experiences of foreign-security cooperation, this article use the qualitative and quantitative methods to research the prerequisite, conditions and pressure of the cooperation between credits guarantee institutions and banks. We believe that the prerequisite of the cooperation between credits guarantee institutions and banks is to improve the strength of credit guarantee institutions and the cooperative wishes of banks. On the issue of cooperation conditions, according to the current situation of China's economic development and security business development, we believe that in the credit guarantee activities the guarantee magnification should be secured in three to five times, the banks should shoulder 30% to 40% of the risk liability. On the issue of cooperation pressure, the paper believes that credit guarantee institutions and banks should clear division of labors in advance and play his part to achieve the max revenue of the overall security projects. Through the effective collaboration on prerequisite, conditions and pressure of the cooperation between credits guarantee institutions and banks, they can promote the establishment of strategic cooperative partnership between the two, give full play to the functions of the credit guarantee and ensure the China's security sustained, healthy development, and thus solve SME financing difficulty, promote the development of SMEs in China.