The Research On Effects Development Of Private Finance On SMEs

The private finance has existed for a long time, and has been working with theformal financial in economic societies.On the views of private finance, academicsand practitioners has two groups: one group think that private finance as a scourge ofthe financial system will be a tremendous impact, affecting the entire financialecosystem; the other think that although private finance will bring some negativeimpact, its positive side should also pay sufficient attention to. In order to serve theeconomic and social services, We should introduce appropriate laws and regulations,make full use of the positive role of private finance.SMEs are an important part of the national economy, the community has createda lot of jobs to meet the needs of people. However, due to national conditions andhistorical reasons, China’s SMEs have been facing difficulties in financing indirect,the lack of innovation activity of SMEs in China has been the development of the rootcauses of stagnation.Private financial investment demand coincides with the funding needs of SMEs,therefore,when blocked in the formal financing channels, a majority of SMEs have toturn to private financing, resulting in a large-scale "stealth " financial markets, suchfinancial market can effectively solve the difficult problem of SME financing, butthere is a big flaw: the government can not control, a certain amount of privatefinancial markets would undermine the effectiveness of monetary policy, affectingthe stability of our financial system; Also, private financial may affect socialstability, therefore, we should think that when take advantage of private financialadvantage,how to use laws and regulations to make it become the most standardizedoperations.Fortunately, developing countries have inherent "advantages ".Throughout theworld, including developed countries, from the United States, Japan, the Philippinesand then to less developed and poor countries, Bangladesh, have full use of privatefinance to promote their economic development, and only take advantage of itsfavorable terms and to regulate it in order to make a "scourge " into a serviceeconomy, promote the development of SMEs lubricant.This paper is organized as follows: The first part describes the purpose andsignificance of topic, research status and research contents and methods; the secondpart defines the connotation of private finance and SME range, elaborated several representative kind of private finance-related theories, such as institutional changetheory, asymmetric information theory, theory of credit rationing and financialstructure theory, these theories are from different emphases on the causes and effectsof private financial means to do the analysis; the third respectively, from SMEsthemselves both factors and the external environment analysis of China’s SMEfinancing reasons; and from a mathematical point of view that private finance forSMEs role in promoting and combine data Zhejiang and Jiangsu provinces, the folkfinancial Promotion development of SMEs do empirical analysis found: SME hadindeed obtained the support of the development of private financial and privatefinance to SME ’s total assets increased by32.7%, to promote SME growth inturnover68.4%, the development of enterprises speed and firm size is positivelycorrelated with firm size increases, the greater the speed of its development; thefourth section lists the United States, Japan and other developed countries and regions,less developed and poor countries to promote the use of private finance to small andmedium-the successful practice of enterprise development; and part from thefinancial reform, financial regulation, credit guarantee system and financial andecological four aspects of the use of private finance to better regulate the status ofSME service policy recommendations. The fifth part is a summary of the full text of,and follow-up studies will be discussed.