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Author Topic: Small and medium-sized enterprise finance  (Read 2421 times)

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totti0815

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Small and medium-sized enterprise finance
« on: June 08, 2008, 11:40:08 PM »

The theorists have continued debating about the necessity and the possibility of establishing small and medium- sized enterprises. However, people have now come to an agreement: The development of SME is possible and necessary. The SME will become the two polar of the economic development. However, they are often ignored and placed in a disadvantageous position in the financing activities. Actually, they rely on the government's assistance to a large extent even in the developed countries with nimble and consummate market system.
   The financing gap refers to the demand of Small business for the capital and the debt is bigger than the amount which the financial system is willing to provide. Since Macmillan proposed the SME financing gap—"the Macmillan gap" in 1931,various countries' economist gradually started to work on this problem, and many countries' government also bring this issue to a strategic level of economic growth. The restructuring of our country's economic system has produced a large quantity of SME. However, the present financing system could not solve the problems facing the SME' s development. Therefore to solve the problem of financing gap becomes an urgent matter. For years, the domestic economy scientists improve research on this issue; our government also brings the SME' s development to the strategic level. It guaranteed its support for SME' s development by promulgating "the People's Republic of China SME Promotion Law".
   The important role the small and medium-sized enterprise plays in the economic growth and social life, affirm the necessity and probability of solving the problem of the small and medium-sized enterprise financing gap, and then introduce the small and medium-sized enterprise financing theory, including proxy cost theory, credit rationing theory, financing cycle theory, relational financing theory.
   Learning the small and medium-sized enterprise financing experience is very important to solve the problem of the small and medium-sized enterprise financing in our country in the present time, Compared to the big enterprises, the small and medium-sized enterprise financing is congenitally deficient, for it has the characteristic of unsymmetrical information, big risk in the operation, the few pawn, the small scale transaction, and so on. Based on these characteristics, this paper analysis each financing channel of the small and medium-sized enterprise: Self-provide financing is congenitally deficient; Policy-type financing is an important way of the SME financing; indirect financing is impeded; the interest financing is more suitable for SME financing.
   The financing system leaded by genetic SME and assisted by the policy must be established to deal with the difficulties of the small and medium-sized enterprise financing. Building our country's small and medium-sized enterprise financing system must firstly create the environment of financing system, and then make some institutional arrangements and policy guidance, establish the genetic indirect and direct financing system, and at the same time establish the policy financing system.
   Based on the previous studies, this paper combining the characteristics of the small and medium-sized enterprise, analysis each financing channel, give a thorough research to" the angel investment", the credit system and pawned financing.
   As the system of market economy in China continuously completed, the small and medium sized enterprises (SME) have been rapidly developed, which not only become the important major power to accelerate the domestic economy growing up in a quick, healthy and consistent way, but also present the strength of life power, play the more important role in terms of adjusting the structure of domestics economy, extending social employment, developing local economy, increasing the financial income, training entrepreneurs team. However, form the effective needs point of view,99% of SME are lack of sufficient loan sources less than 20%. As entering into the WTO, with the foreign capital's impacting and enterprise management circumstance's changing, enterprises financing issue have turn into the most bottleneck of restricting SME's existing and development. "Financing problem" of small-and-medium-sized enterprises is the world difficult problem. In our country, this problem is more distinct. It will benefit the development and growth of SME and continuous increase of national economy that we analyze how to promote capability of enterprises financing and investment by solving the "Financing problem" of small-and-medium-sized enterprises.  During three-transaction periods of enterprise financing mode in China, as it presents multi development trend, we should also through multi modes to solve "Financing problem". According to the experience of developed countries, speeding up the reform of SME' outer environment, transferring financing awareness inside of SME are all selective means to solve the problem of SME financing and it will also accelerate and enlarge the development of SME.
    A striking problem in finance for small and medium - sized enterprises is the difficulty for firms to get loans and for banks to extend credit. To solve this problem, we can draw useful experience from the Japanese model: firmly establishing the legal status for them and safeguarding their interests through sound legislature, providing double financing sup2
port for them through small and medium - sized financial institutions and government financing institutions, actively expanding channels of direct finance, and speeding up the improvement of loan guarantee system for them.
   Small and Medium Business (SMB) is a special huge business colony with strategic position in the economic and social development of the countries all over the world. On one hand, SMB is playing an irreplaceable role in
creating GDP, increasing export, promoting employment and driving technology progress; On the other hand, a series of reasons such as the scope of the SMB is small, the overall level of labor productivity is not high, and the transparency of information is in a relatively low grade, cause an inferior position in keen competition with Big Business, which is particularly reflected by the problem of financing difficulty. The particularity of SMB is called " weak tendency of strong location "。
On the view of Information Economics, the dissertation expatiates on basic economics principle that credit assurance is produced from, and draws a conclusion that " financing difficulty " is mainly caused by information
asymmetry. On the basis of systematically annotating and referring to the foreign financing assurance theory and practice of SMB, and through the actual investigation on the credit assurance practice of SMB in our country, the dissertation further expounds the extant problems of credit assurance system of SMB in our country in view of real examples. Since credit assurance industry is a risky trade and the main risk comes from SMB, the dissertation
analyses the source of the risk in chapter four, and structures the theory frame of the credit assurance system of SMB in our country. The viewpoint of the dissertation is that the most practical method for assurance organization to evade assurance risk is to take credit evaluation on each stage of SMB. A system of evaluation index of credit is established in chapter five and that how to use the method of hazy synthetical judgment to take credit evaluation on SMB is told.
   At present, many countries and regions established policy loaning institutions for supporting financing of Mid- and small-scale enterprise, forms as follows: Firstly, policy loaning institutions appears in the form of government, such as USA Mid- and small-scale Enterprise Bureau and British Servicing for Small Enterprise Bureau. USA Mid-small-scale Enterprise Bureau is an official institute, and it not only manages Mid- and small-scale enterprise, but also handles policy financing of Mid- and small-scale enterprise; British Servicing for Small Enterprise Bureau was established on April, 2004, which inherited and took over loaning programs built by British government for supporting Mid- and small-scale enterprise. Secondly, policy loaning institutions appears in the form of policy bank, such as Japan established Central Treasury combined by business and labor in 1936, and formed National Financing Pool and Financing Pool of Mid- and small-scale Enterprise in 1949,1953 respectively, which considered loaning of Mid- and small-scale enterprises as object of service. Thirdly, policy loaning institutions appears in the form of fund, such as British Phoenix Fund, Prince Fund and European Construction Fund from European Union, its major function is offering loans for poor areas and development of unemployed youth.
   However, most development banks do not provide financial services more effectively on supporting development of Mid- and small-scale enterprise. But KFW (Kreditanstalt Fuer Wiederaufbau Bankgruppen),DBJ(Development Bank of Japan) and KDB (Korea Development Bank) are successful exceptions. Why could these policy banks make success comparatively? Their experience is very useful for Chinese institutions to develop supporting finance of Mid- and small-scale enterprise.
   China Development Bank is a development-oriented financial institution of our country. Recently China Development Bank explored development-
oriented financial theory in practice, which combined organization advantage of government and financing advantage of CDB to perfect our country's system damage and market damage, then it achieved good results and realized objects of Government through cultivating market and developing market. Leading in the development and cultivation of CDB, traditional key fields of infrastructure, and basic and pillar industries which financing institute didn't want to enter at past, but now which are competitive fields of financing institute; Infrastructure construction bottleneck is alleviated greatly.
   At present, Mid- and small-scale enterprise is hot problem and new bottleneck during period of constructing a well-off society. In situation of commercial bank having not will to take part in this field, Getting through financing channels for small-scale enterprise needs development-oriented financial theory. This paper was based on difficulties of financing for Mid- and small-scale enterprise, and learned from advanced experience of foreign counties, then proposed supporting financing for Mid- and small-scale enterprise by development-oriented financial advantage.
    With the increasing growth of the social market economy, small and medium sized companies play a more and more important role in the domestic economy. The difficulty these companies face in financing has become the
bottleneck in their further growth. This issue has attracted wide attention from the entire society. So, it is important to analyze the reasons behind the difficulty and to figure out solutions. This thesis uses credit allocation theory, transaction fee theory and game theory as the framework, explores the reasons from the company, finance organizations and social guarantee mechanism to reach the conclusion that lack of credit is what leads to these companies' difficulty in getting financing. To resolve the small and medium sized companies' financing difficulty, this thesis looks at these companies' credit evaluation process and analyzes these companies' financing credit factors. Considering small and medium sized companies' internal factors-credit quality and credit ability and external factors-the overall disadvantageous credit environment, this paper arrives at the following measures that strengthen small and medium sized companies' financing credit: improving the companies' credit quality and credit ability by developing these companies' overall performance (including strengthening credit knowledge, strengthening companies' economic development and credit management, building advanced management system, increasing citizen loan ratio),relying on inter-company mutual credit as credit resources (joining small and medium sized enterprise groups),bettering credit environment with government and society's help (changing government agencies' functions,  building credit system and credit sharing mechanism, strengthening credit laws, and improving small and medium sized companies' guarantee system).

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JWI

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Re: Small and medium-sized enterprise finance
« Reply #1 on: June 08, 2008, 11:42:49 PM »

TLDR  :(
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timmysoboy

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Re: Small and medium-sized enterprise finance
« Reply #2 on: June 09, 2008, 12:08:46 AM »

my eyes hurt.
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DogOn

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Re: Small and medium-sized enterprise finance
« Reply #3 on: June 09, 2008, 09:31:07 AM »

Copy and paste much?

Anyone who can read japanese (im guessing) tell me if this guy has stolen it or has merely posted it elsewhere?
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BonerJoe

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Re: Small and medium-sized enterprise finance
« Reply #4 on: June 09, 2008, 09:31:34 AM »

TLDR  :(

The worst I've ever seen.
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DottieCajigas

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Re: Small and medium-sized enterprise finance
« Reply #5 on: September 22, 2014, 05:39:13 AM »

Small business enterprise sometimes gets their additional capital from a bank loan. When financial crisis hits the country, banks raise their interest that worries consumer. Monetary discipline is what they need to avoid bank runs and keep their investors intact. If you need some financial help in these hard economic times, you can get a cash advance.
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