China's Small And Medium Banks The Role Of Sme Financing

Since the inception of economic liberalization in 1978, China's small and medium sized enterprises (SMEs) are undergoing a robust development trend and playing an important role in the national economic development. However, some problems are always in their way of development, among which financing difficulty is regarded as the most serious problem to the development of SMEs. Since the new round macro economic cycle started in last year, the financing problem bring great troubles to the development of small businesses, which would have some effect on China's economic stability and development.In the light of SME's importance to the national economy and their current difficult operation environment, it is necessary to research into the SMEs' present financing problem and strives to find the solutions, which is also the purpose of this paper.This paper, firstly, conducts an in-depth analysis on the cause of our SME's financing problems for the present, pointing out that the basic reason of SME's financing problem rested with the information asymmetry. Secondly, analyses different theories at home and abroad concerning small and medium sized bank's (SMB) financing relationship with SMEs under the circumstance of information asymmetry, coming up with the standpoint that it is one-sided to overvalue or undervalue small and medium bank's role in increasing the financing access for the SMEs, and SMB's role in SME's financing should be reappraised after analyzing the current situation of SMB's support to SMEs development in China. Thirdly, by analyzing cases of two Zhejiang bank's practice in SME business, the paper demonstrate that the SMBs' advantage, willingness, capability and problems in developing SME business at present stage. Finally, based on theoretical analysis and case study and combined with Chinese SMB's external environment and its own strength, this paper puts foreword the conclusion, at the current stage, the SMBs may have some effects on assisting SMEs to get financing access, but this function should not be overestimated. The SME financing problem could be solve after analyzing the root cause of the problem and forming a full set of corresponding plans. At the same time, the paper brings out some suggestions of how to develop SME business to China's SMB, and how to resolve China's SME financing problems.