Development Of Private Financial Markets Is An Effective Channel To Solve The Financing Of Small And Medium-sized Enterprises

Since the reform and opening of China, Chinese medium-sized and small enterprises (MSE) have developed rapidly. MSE have played an important role in our national economy, and they have made great contribution to the constant, stable and harmonious development of Chinese economy. Meanwhile, the development of Chinese MSE is also facing a great deal of disadvantageous factors, among them the greatest disadvantage is the financing difficulty. The original financing channels can not meet the requirement of the financing of MSE, and they have to find and develop more suitable financing channel for themselves. The emergence and development of informal financial market have internal and necessary relation with the problem of financing difficulty of MSE. On one side, MSE have very limited financing channels, the finance supply of financial market is seriously insufficient. MSE'finance demand can not be satisfied, they have to seek help of informal finance. On the other side, informal finance have increased greatly because of the rapid economy grow. A great amount of unused capital can not find good investment directions. Therefore, informal financial market has emerged and developed. The financing of 90 percent of MSE relies on self-financing or informal financial market. At present, many problems exist in the process of MSE'financing through informal financial market, which include: 1) Both MSE and informal financial market are facing enormous financial credit ventures. 2) MSE still have their own financial disadvantages. 3) The development of informal financial market still needs to be perfected, and laws and regulations need to be amended and improved. However, in comparison with other financial channels, informal financial market still has many outstanding advantages for MSE'financing, such as information advantage, security advantage and trade cost advantage etc. This thesis discusses the necessity, feasibility and significance of MSE'financing through informal financial market. By introducing the successful experience of Wenzhou style financing through informal financial market, this thesis gives some advises for the mutual developments of MSE and informal financial market. Advises include: (1) Government should enhance the system innovation, legalize informal finance, and give informal finance a clear legal status. (2) Perfecting the laws and regulations to standardize and ensure informal financing behaviors. (3) Encouraging financial innovation, promoting social financing. (4) Establishing informal financing supervision and management system and reducing financial venture. (5)Increasing the credit rate of MSE, standardizing MSE'accounting management and enhancing the financing capability of MSE. Therefore, this thesis believes that the development of informal financial market will be an effective financing solution of MSE.