The Impact Of Financial Connection On The Double Performance Of MCCs In Guangxi

Since the reform and opening up, China’s economy has been developing rapidly, but China’s private economy is faced with double dilemma in the long term, which are poor financing and the lack of investment channels. while formal financial is difficult to adapt to our country’s economic development Microcredit Companies (MCCs) is a financial innovation, whichnot only bring private capital into the financial sector to improve its investment channels, butalso help solve long-term financing constraints of private enterprises,especially small andmedium-sized enterprises(SMEs), and thus to some extent, improve China’s financial system.However, MCCs began to expose problems in the rapid development.Under the background oftransition, from the financial connection of this informal system, we can explore a road of MCCs to a high level of development.It has important significance.This paper firstly discusses the impact of the financial connection to SMEs’ financing and development, making the theoretical foundation for the analysising the financial connection impact on the Double Performance of MCCs,then associated with the current situation of Guangxi’s MCCs proposed impaction of the financial connection to theDoublePerformance of MCCs.The third, Using a sample of 190 Microcredit Companies (MCCs) of Guangxi in 2013, this paper empirically analyzes the relationship between financial connection, and MCCs’ double performance (financial performance and social performance). It is found that, in the absence of formal institution,financial connection can enhance the positive effects of financial support, businessdiversification and relationship-lending technology on financial performance;meanwhile, financial connection can contribute to the achievement of social performance to a limit extent. Thus, the paper recommends that, in order to enhancethe dual performance, we should make full use of the advantages of financial connection and other informal institutions in short-term. In the long run, the reform of formal institution is essential, and MCCs must focus on the innovation ofrelationship-lending technology, in order to strengthen its core competitive advantage.