Financing Problems Of Small Agricultural Businesses In Henan

As one of the biggest agricultural province in China, Henan has a large numberof small agricultural companies. This thesis investigated in financing issues of smallagricultural companies in Henan province. Hard to get funding for small companies is ageneral issue in our country, and this difficulty is even more obvious for smallagricultural companies.As we are all aware, small agricultural companies contribute a lot to our stablesociety by generating a large number of countryside jobs. However, in the past decades,there is lack of effective financing source for those companies which generally operatedat low efficiency. Thus if the current situation persist in future, it will impose someimpact on the development of our first industry in our country.This paper did questionnaire analysis in two Henan representative areas: weperformed investigation and statistics regarding the financing issues for smallagricultural companies, such as the current funding situation, funding resources as wellas funding structures. Through this analysis, we have gained further and comprehensiveunderstanding about the financing difficulty issue for the small agricultural companies,in addition, we have studied this problem via quantitative and qualitative methodology.This paper can be split into six parts: the first part is introduction and the secondpart is the summary of all theories related to small agricultural companies; in the thirdpart, this paper analysed the current situation of financing difficulties and its relatedproblems, this analysis performed from financing demand, financing resources andstructures. In terms of financing resources, we investigated in obtaining funding from both financial institutions and private parties; in the fourth part, we explored the possiblereasons of financing difficulty from the following three areas, small company scale, lackof comprehensive management system and lack of creditability. From guaranteeperspective there are two reasons, no comprehensive legal support and weak risk controlability. There are three more reasons, the less execution degree of government policy, notenough credit supply from commercial banks and the information asymmetry betweencommercial banks and corporations. The fifth part includes the five proposed possiblesolution for the financing issue, restructure rural financial system, improve managementability of representative companies, extend financing channel of small and mediumcompany, improve insurance system of small companies in rural area and improve thecredit rating and guarantee system. The last part conclude this analysis.