Western Region Sme Financing

Small and Medium-sized Enterprises (SMEs) are occupying an important strategic status in the national economy development. They can help to protect the national economy from recession, keep it growing healthily and make more opportunities for employment. According to the statistics, more than 90% enterprises are SMEs. However, in recent 20 years, although the international money markets have provided conveniences for big enterprises especially multi-national corporations, SMEs actually encountered the finance constrains more and more, which makes financing become the thorniest bottle-neck in SMEs' development. Compared with the Eastern China, macroscopic economy environment in Western China is more inferior. SMEs in western area are lack of competitive ability, plus their flaws in management mechanism, property structure and financial condition, which makes the fund question become more sophisticated there.This thesis is divided into four parts as following:Part 1, an introductory chapter, focuses on the backgrounds and the important significance of SMEs' financing questions in Western China. After introducing the researches that have been done in and out of China, this part outlines the purpose of the study, the basic clue, research methods, the structure and content of this thesis. The main creative ideasand difficult points are introduced as well.Part 2, that is chapter 1, give a definition to the concept of SME and its financing ways theoretically. We note that development of SMEs is the best way for Western China to improve economic condition to catch up with the eastern area. After that, this chapter generally analyzes various kinds of possible sources and channels for SMEs to obtain the fund.Part 3, which corresponds to chapter 2, deal with the fund supply-demand system and its efficiency of SMEs in Western China. From supply aspect, inhabitant department's savings in banks are the potential fund supply. In consideration of the subjective "will" factor of them who supply fund, this chapter analyzes the realistic fund of SMEs in the western area. Referring to the financial demand of MSEs in the western region, the potential demand will be definitely increasing because of enterprises' expanding reproduction essence. However, the realistic demand was limited because SMEs in the western region are not competitive enough. The contradiction between potential and realistic in both supply and demand fields announces the obstacle questions of the system. Because the financing system is imperfect, there are too many barriers for MSEs to get accesses to bank smoothly. Consequently, the efficiency is extremely low.Part 4, constituted by contents of chapter 3, is the conclusion part ofthis thesis. In this chapter, we appraise the SMEs' financial system at first. Then, we reveal the reason for SMEs' being in predicament in financing, which is that the system is not established well. Actually, supply-demand system is a small part of financial system and SMEs are not the unique principal part in the system. Besides the supply-demand system, credit and servo-systems are also very important. Without them, banks and SMEs could not interact well. Since the information in financial market is not asymmetrical, SMEs could probably provided false information so as to get loan from banks, but there is not any mechanism to guarantee banks benefits. As a result, there are more and more blocks between them. In order to help SMEs to get fund more easily, we have to build up a strong system to keep every party's profits. In this system, SMEs, banks, all levels of governments and social intermediary service organizations should mutually cooperate together. Only in this condition, could the financial system function well and make contributions to SMEs' financing.