Study On Default Risk Of Small And Medium Enterprise Collective Notes

With the continuous development of China’s market economy, small andmedium-sized enterprises (SMEs) as a force in the market economy is increasinglygrowing. In2012, there are total of343769industrial enterprises in China,including53866medium-sized enterprises and280455small enterprises, the totalnumber of small and medium-sized enterprises accounted for about97.25%of thetotal number of enterprises. Small and medium-sized enterprises, which in largenumber and wide range, make a great contribution to the economic development ofChina, but the problem of financing has long been restricting the development ofSMEs, more than half of the SMEs think they are difficult to get loans from the bankfinancing. In order to avoid risk, the Banks are also more willing to offer loans tothose large scale and strength of enterprises, which leading to a severe lack of fundsfor small and medium-sized enterprises. In order to alleviate the financing difficultiesof SMEs, in2009the National Association of Financial Market Institutional Investorsintroduced a SMEs Collective Notes financing mode for small and medium-sizedenterprises, compared with other financing modes, the SMEs CollectiveNotes financing has a great advantage in terms of barriers to entry, creditenhancement, risk prevention and other aspects, to perfect our country capital marketstructure, improve the management level of small and medium-sized enterprise,especially it has opened up a new path for small and medium-sized enterprisefinancing, which has the profound significance and value. However, any kind of newsystem, in accepting the practice test, will appear all sorts of problems, especially it isfirst implementation in our country about the the SMEs Collective Notes, more over with the numerous participation body and much link, the system design is not enoughmature. Especially in its rapid development in recent years, it appears the number ofdefaults. However most of the researches on SMEs Collective Notes are focused onthe view of economy, legal studies are numbered, let alone the studies on default riskof SMEs Collective Notes.Now, once the SME Collective Notes default, basically guarantee companies paycompletely. The improvement of the system of guarantee is important in SMEsCollective Notes issuing and payment, meanwhile which is significant in protectingthe interests of investors. However, it is overly dependent on guarantee system thatleading to ignore the other aspects of the system to guard against the risk of default.The author believes that all aspects of the system and SME collection of notes are anintegral part of the whole, any part of the mistake could lead to the risk, so we shouldbe fully considered in all aspects of design, and strive to improve as much as possibleso that all aspects of mutual cooperation, coordination and joint efforts to guardagainst the risk of default as a whole. This paper, based on previous studies, combinedwith the issue and default condition in recent years, study on all aspects of SMEsCollective Notes and participation in the body, such as in-depth research, and eventsof default for SMEs Collective Notes, from the perspective of default preventionto propose how to build the perfect system for SMEs Collective Notes, to prevent therisk of default.