Research On The Financing Mode Of Small And Medium-s Sized Enterprises In China

Small and medium-sized enterprises(SMEs)face difficulties when seeking finance,which is considered as a worldwide problem.The native small-scale and high risk of SMEs is in innate contradiction with financial institutions' wish to pursue high profits at low risks.In the process of solving this conflict,problems emerged: market and policy failures and the coexistence of market effectiveness and ineffectiveness.Relative to large enterprises,SMEs have small-scale and volatile and high-risk business operation and poor credit.as well as capital is a special commodity,which is subject to erosion when it is leased or entrusted to SMEs and may become bad debts without any return and compensation.Therefore,capital owners or financial institutions are prudent in funding SMEs or are required to be so by relevant government departments.This predetermines the difficulties faced by SMEs in financing.Furthermore,like any other commodity,the retail cost of capital is higher than its wholesale cost.SMEs seek finance in a much smaller scale than large enterprises and so have to pay a higher price,also the cost of funding to SMEs is higher.Most SMEs,however,cannot find ways to obtain the money they need even at a higher price.This thesis begins with theory review and then lists financing options for SMEs.By studying cases of different types of SMEs,this thesis illustrates the financing means and effects for each type of them.Based on the detailed case and literature analysis,this thesis provides possible means for SMEs to obtain finance so that they won't miss development opportunities.It also reminds SMEs to maintain integrity and good credit and to undertake proper business operation and pursue sustainable development in the first place.