A Research On Private Finance And SME Financing

At present, the problem of "Two Excesses and Two Dilemmas"-excessive SMEs withfinancing dilemmas and excessive private capitals with monitoring dilemmas-in China hasbecoming more deteriorated. In view of the current finance system's absence in SME financingissues, private finance with unique advantages will play a significant role in SME financing; while,the standardization and rational development of private finance cannot be separated from thesolution to SME financing. Thus, it is very important to research on how to combine privatefinance and SME financing in the very time. Our task is to find a way out to standardize andlegalize private finance, as well as to normalize finance order, optimize finance environment andavoid finance crisis, and at last to set up a perfect finance system which can be in accommodationwith Chinese economy. On the background, I choose to research on Private Finance and SMEFinancing which is aimed to analysis the current finance institutions' restraints on both privatefinance and SME financing, as well as to find out an optimal develop pattern of Chinese privatefinance based on the international comparisons.In the past research, the relationship of SME financing and private finance is neglected, whilein this article, I combined SME financing dilemmas and private finance issues. I researched intothe feasibility and applicability of private finance helping SME financing, so to find out severalsuggestions for private finance development. As a result, there pointed out a way for the perfectionof Finance System for SMEs and the legalization of Chinese private finance.There are six chapters in this article. The first one is an introduction which is about the topicselection reason, summarization of related literatures and research framework of this article. Thesecond one is to talk about the current development and problems of Chinese SME financing; inthis part, through the analysis of SME financing supply&demand, I will come to the conclusionthat the current finance system has constraint on SME financing supply. The next part is ananalysis of Chinese private finance status and problems so as to find a solution to private financemanagement based on its current operation crisis, as well as research on its positive effects oneconomy development, finance system setup and SME financing, then to talk about its negativeeffect on the economy operating. Chapter Four will find out the optimal development path ofChinese private finance into SME financing by means of international experience comparisons.Then based on above, in the fifth section, I will list several suggestions on private financedevelopment as to solve SME financing issues. The last chapter is a summary of the article.