The Research On Financial Support For High-tech SMEs In Nanjing

Despite Nanjing’s vault of entrepreneurial, R&D, and financial resources, the city retains an economy characterized by large enterprises in traditional and heavy industries. To upgrade its mode of economic development to one that is propelled by innovation and technological advance, Nanjing must seriously consider developing high-tech SMEs.Experience shows that lack of financial capital has always been a major impediment to the development of high-tech SMEs. The unhelpfulness of financial institutions is partly the result of asymmetric information and partly the result of high-tech SMEs’unique risk profile. In addition, government’s support for these SMEs has not been substantial enough.Based on the analysis of high-tech SMEs in Nanjing and drawing on the experience of other regions, this paper concludes that the following methods will be supportive to financing these SMEs. One is forming a new type of financial institution, such as the so-called "technology bank", which is capable of alleviating the problem of asymmetric information and providing financial products that match high-tech SMEs’risk profile. The other is emphasizing the role of government as the provider of public goods. Three major functions of government are to correct the market failure by reducing the degree of information asymmetry, to attract funds, and to guide the investment decisions of those funds.