Analysis On Innovative Guarantee Models Of China’s SME And Corresponding Recommendations

Since China’s reform and opening, the number and the scale of small and medium-sized enterprises (SMEs) have increased rapidly, occupying very important status in national economy. However, financing difficulties hinder the development of SMEs. So it is urgent to study the problem and find the solutions.Researches show that the root of SMEs financing difficulties is asymmetric information between banks and SMEs. Commercial banks prefer large-scale enterprises rather than SMEs. How to solve the asymmetric information? SMEs financing guarantee institution is the answer. It builds a bridge between the two parties so that banks are able to get more information about SMEs. At present, there are three kinds of guarantee institutions, policy-based guarantee institutions, commercial guarantee institutions and mutual guarantee institutions. Although they have different customer orientations and business models, they play important roles in the field of SMEs financing. Due to the increasing demand of SMEs financing, the guarantee industry develops in high speed. However, the traditional SMEs financing guarantee model has several defects, which is unfavorable for the SMEs to get loans from banks. The way to solve this problem is innovation.This article presented three innovative guarantee models. They use financial derivatives to introduce other financial market participants into the trading, for example venture capital institutions, trust institutions, government and so on. In this way, they improve the financing ability of the traditional SMEs financing guarantee model from different aspects. To analyze these innovative models is helpful for solving SMEs financing difficulties.In summary, based on the study of the previous situation of SMEs financing guarantee market and the analysis of three innovative guarantee models, this paper provides some recommendations on the construction of effective SMEs financing guarantee model.