A Study On The "credit Factory" Model Of Commercial Banks

Since the U.S. subprime mortgage crisis broke out in2008, the financial crisis spreadrapidly sweeping the globe, and all countries in the world have fallen into the situation ofeconomic recession successively. More and more enterprises have failed, or are on the brinkof bankruptcy, with no exception of China. Especially a large number of domestic small andmedium-sized enterprises which experienced the greatest shock of the financial crisis arefacing the serious problems of shortage of funds and financing difficulty. Therefore, theirsurvival is not optimistic.In order to alleviate the negative effects of the financial crisis and solve the bottleneck ofSME financing difficulty effectively, the state has issued many policies and regulations,increasing the support for SMEs. Meanwhile, the state explicitly required the domesticcommercial banks to focus on SMEs and increase and improve credit volumes and loangrowth for SMEs.At the same time, with the more and more intense competition among the commercialbanks, in order to increase revenue sources and explore new areas of business, SMEs havegradually attracted the attention of the commercial banks. Commercial banks make strategictransition and adjustment and the high-quality SMEs have become key customer groups forthe competition of commercial banks. Especially after2009, domestic commercial bankssignificantly increased innovation in SME financing, more and more innovative products andservices available gradually, which to some extent, effectively resolves the financing problemof some small and medium–sized enterprises. Among the innovative services in SMEfinancing, the “credit factory” model is worthy of our focus. The “credit factory” businessmodel with its professional management and standardized operation can achieve the objectiverequirements of the intensive management in the case of a small amount of loans to SMEsand the large number of customers, as well as strengthening the constraints of the SME creditbusiness processes and improving the ability to control the risk. This is not only thesuccessful experience of the international advanced commercial bank in developing small andmedium-sized enterprise business, but also representing the direction of development of theSME business model in the domestic commercial banks. It may become the mainstreammodel for future commercial banks to develop the SME financing business.This paper expounds and analyzes the policy background and economic background ofthe “credit factory” model based on the elaboration and analysis of the status of domestic SMEs and financing and emphatically analyzes the main features of the “credit factory”model, the mode of operation and the basic operating procedures. It elaborates theintroduction and dissemination of the “credit factory” model in the domestic commercialbanks, as well as the main practices of commercial banks, the successful experience andachievements. Moreover, it takes Hebe Province Branch of China Construction Bank as agood example of running “credit factory” model and makes a comprehensive summary of itsexperiences and practices in the pilot “credit factory” model, which offers the interbankreference and help.“Credit factory” model not only opens up an effective way for domesticcommercial banks to address SME financing difficulty but also plays a positive role inadjusting asset structure of commercial banks, changing the mode of growth, controllingcredit risk, and maintaining the sound operation, in line with the development strategy ofcommercial banks. Thus, the “credit factory” model will have broad prospects in itsapplication to commercial banks in China.