Financing SMEs in Hubei Province Empirical Analysis of Choice

[Abstract] In this paper, a sample survey based on data obtained from the type of enterprise, firm size, business Development stage and four levels of ownership, analysis, and financing small and medium enterprises in Hubei Province summarized the basic characteristics of options.

[Keywords:] choice of bank financing small and medium private finance credit facilities

Financial activities in different countries, different penetration in different regions. Likewise in the same region, different characteristics of the penetration of small and medium enterprises also differences. In this paper, August 2006 -2007 sample survey in June by the relevant data as the basis for from the type of enterprise, ownership, enterprise-scale business Development stage and four levels, analyzes and summarizes the financing options for SMEs in Hubei Province basic characteristics of financing options for SMEs in Hubei Province to reflect the differences in behavior of its financing system provide data to support the construction and analysis of ideas.


First, the sample and financing analysis shows

The SME Financing survey data from 14 areas in Hubei Province, were collected 109 samples, 92 valid samples, which samples the provincial capital Wuhan, most enterprises, is 20, accounting for 21.7% of all sample companies, the sample enterprises is the least number of Suizhou and Yichang two regions, only one, of the total sample of 1.1%. the specific regional distribution of sample enterprises and the proportion of the total sample in Table 1.


According to preliminary statistics, in addition to internal financing, all the 92 enterprises, 53 enterprises have had the experience of bank loans, accounting for 57.7% of the total sample enterprises; sample of enterprises through private finance are 21, take other financing ( government support, venture capital, leasing, etc.), 13 households, debt and equity financing to 0. can be seen, capital of Hubei Province mainly from internal financing of SMEs, bank credit, three forms of private financing.

SME financing facility in essence is their external financial difficulties, that is, when SMEs lack the internal resources (funding gap occurs), the difficult time and in full access to external financial support. For these two reasons, this article only in respect of Hubei Provincial SME bank credit facilities and the basic characteristics of private financing options were discussed.


Second, characteristics of financing options

1, from the type of business
(1) type of description of the sample companies. According to <"State Industry Classification Standard>>, we will sample of the survey of enterprises in agriculture, forestry, animal husbandry and fishery division, manufacturing, wholesale and retail food Industry and other businesses a total of four categories. Sample manufacturing Industry, the largest number of SMEs, accounting for 71% of the total sample, agriculture, forestry, animal husbandry and fishery, and wholesale and retail food and beverage Industry accounted for 13%, respectively, and 11%, and other types of enterprises accounted for 5%.

(2) different types of business financing options in Differences. Manufacturing SMEs choose a higher proportion of bank credit facilities. Figure 1 shows that SMEs in the manufacturing enterprises to choose a bank credit facility to the highest proportion, 59%; wholesale 50% of the retail food Industry, agriculture, forestry, animal husbandry and fishery accounted for the lowest, only 20% of SMEs in the manufacturing sector bank credit financing options was significantly higher than the wholesale and retail food and beverage industry and agriculture, forestry, animal husbandry and fishery.


(3) agriculture, forestry, animal husbandry and fishery, and wholesale and retail food service industry a higher proportion of private financing options. Analysis of the data in Figure 2 that, SMEs in the manufacturing sector the lowest proportion of private financing options, only 14%, while wholesale and retail agriculture, forestry, animal husbandry and fisheries and food the proportion of services were higher than the manufacturing sector, were 20% and 25%, they have obvious selective private financing preference, this may be because these two types of corporate banking credit facilities arising from the financing of low substitution effect.



2, the size of the enterprise
(1) sample size of that business. The number of workers in the sample of 400 enterprises with less than 62 households, 67% of the total sample, Among these are 50 people accounted for the largest proportion of enterprise, possession of 18 companies, all of the 21 samples %. Specifically, the number of enterprises in the 50-100 and 13, accounting for 14% of the sample; 100-200 15 companies, accounting for 16% of the sample; 200-400 people there are 16 enterprises, accounting for 17% of the sample; 400-800 8 of enterprises, accounting for 9% of samples; 800-1600, 12 business people, accounting for 13% of samples; and unspecified number of more than 1,600 enterprises are five , accounting for 5% of the sample.

(2) selection of different sized enterprises financing Comparison. The difficulty of small business loans larger than the larger enterprises. 70.1% of surveyed enterprises believe that the larger the scale ability to pay, the more levels of management capacity and credit high, therefore, banks lending to SMEs is serious when enterprise size, only 29.9% of enterprises believe that the scale of discrimination does not exist. specific to Figure 2, the bank refused loans by the enterprises, 400 enterprises account for less ratio is very high, more than 80%; which enterprises with less than 50 was 100% rejected; 50-100 90% of enterprises; 100-200 of enterprises was 92.9%; 200-400's enterprises 79.6%; and scale of enterprises with more than 400 people refused to significantly lower lending rates, including 400-800 there are only 37.5% of the companies refused ,800-1600 and 1600 the proportion of enterprises with more than 33%, respectively, and 40%. Figure clearly shows the trend in the curve, as the business expanded and the bank refused to loan companies basically a downward trend in the proportion of left to right, this phenomenon indicates that bank credit facilities for SMEs in Hubei Province, there is serious the scale of discrimination.

(3) smaller businesses prefer private financing. Figure 3 shows a different scale of business to choose than the number of private financing. Data from the chart that, 50 people choose private financing of business enterprises the most, accounting for its the total number of 1 / 2, followed in size between 200-400 companies, the proportion was 31.3%, while more than 1,600 private financing options business was 0. Thus, we believe that the size of SMEs in Hubei Province and Folk financing options are basically inversely proportional change in the size of the smaller, choose the more private financing of enterprises, whereas the less.



3, from the Development stage of
(1) sample business Development stage instructions. Most of the sample companies formed after 1995, accounting for 79% of all samples, which was created in 2000 to-2005 most enterprises, there are 44, 48%, followed by 1995 previously established enterprises, 18, 20% between 1995-2000 set up 16 enterprises accounted for 17% in 2005 to create and unspecified future time, enterprises were set up eight and six companies account for sample about 9% and 7%.

(2) different stages of Development financing options diff.'s Corporate banking business for a long time the credit selection ability. Figure 4 data show that small and medium enterprises established before 1995, the way companies choose a bank credit the highest proportion of 83.3 %. because this phase of the enterprise for at least 10 years of operating time, more mature and stable business, many companies have scale, so the ability to obtain bank credit funds than other stages of the enterprise; followed by the 1995-2000 established between the companies, the proportion was 75%, the third is the establishment of enterprises between 2000-2005, the proportion was 47.7%, while after 2005 the establishment of the enterprise, choice of bank credit facilities, the ratio is 0. because Established at this stage is very short, only about 1 year (calculated based on sample surveys of time), according to conventional difficult for them to credit funds from the bank. The above analysis shows that bank credit financing options for SMEs in Hubei Province with the ability to extend business hours gradually increased.


(3) business enterprises prefer short choose private financing. Data from Figure 4 that between 2000 and 1995-established enterprises the highest proportion of private financing options, up 43.8%; small and medium enterprises established before 1995, 16.7% ; established enterprises between 2000-2005, compared with 25.0%; but established enterprises after 2005, the proportion of private financing to 0. the main reason for this phenomenon is: such enterprises in the start-up period, less investment, internal financing to meet the basic needs, it is generally not the use of risk and cost of private financing are high. Through analysis, we found that, in addition to established enterprises between 1995-2000 private financing options proportion a bit abnormal, the private small and medium enterprises in Hubei Province With financing options force is basically a continuation of business and reduce the time.


Third, from the ownership of

1 shows the sample form of enterprise ownership
Sample enterprises are involved in the five categories of ownership: state-owned enterprises, private and individual enterprises, foreign funded enterprises, collective township and village enterprises and joint-stock enterprises. From the ownership of distribution, there are 40 joint-stock enterprises, the highest proportion, 44%; followed by private 35 individual enterprises, accounting for 38%; the third is funded enterprises, 12 households, accounting for 13%, rural collective enterprises and state-owned enterprises and other forms of ownership, 2 and 3, respectively, accounting for 2% of the total sample and 3 %. To ensure the credibility of the conclusions, the paper only to joint-stock companies, private and individual enterprises, foreign funded enterprises and private financing of bank credit the basic features selected for analysis. reposted elsewhere in the Research Papers Download http://www.hi138 . com 2, enterprises of different ownership forms of financing options Comparison
(1) Credit discrimination in the private and individual enterprises, the performance of credit activities more visible. "Bank loans are considered business ownership," the statistics show that 43.5% of enterprises believe that financial institutions in financing SMEs discrimination exists in ownership, holding the opposite view of the sample enterprises is 56.5%. Specifically, 37.5% of the joint-stock enterprises, 41.7% of foreign-funded enterprises, that of credit discrimination (see Figure 5), data differences between them is not obvious, and in the private individual companies, who agree with the views of enterprises amounted to 57.1%, significantly higher than other forms of ownership. shows that bank credit transactions Hubei ownership of discrimination still exist, including private and individual enterprises, the most serious credit discrimination, therefore, they notice bank credit funds are more difficult.


(2) foreign-funded enterprises to choose the highest percentage of bank loan financing. According to Figure 6 shows, the most preferred bank credit financing in the form of ownership is funded enterprises, the choice of the number of enterprises than bank credit of up to 71.4%, followed by joint-stock enterprises, 62.5%, the lowest proportion of private and individual enterprises is only 45.7%. according to different forms of ownership, small and medium enterprises in Hubei Province selection force on the bank credit facilities arranged in descending order: foreign-funded enterprises, joint-stock companies and private and individual enterprises.


(3) The private and individual enterprises, the highest proportion of private financing options. According to Figure 6 shows, select the largest private financing in the form of ownership is private and individual enterprises, the ratio of up to 31.4%, second and third place were three joint-stock companies and owned enterprises, the rates were 17.5% and 14.3%. according to different forms of ownership, private financing options for small and medium enterprises in Hubei Province force descending order were as follows: private and individual enterprises, joint-stock companies and foreign-funded enterprises.


IV, conclusions and recommendations

The above analysis clearly shows that due to business type, size, ownership of different forms and stages of development, small and medium enterprises in Hubei Province in bank credit and private financing options exist significant differences.

Type from the enterprise point of view, small and medium enterprises in Hubei Province's ability to choose a bank on credit descending order were: manufacturing, wholesale and retail food services and agriculture, forestry, animal husbandry and fishery. And the choice of private financing arranged in order of descending strength : wholesale and retail food services, agriculture, forestry, animal husbandry and fisheries and manufacturing.

Scale from the enterprise point of view, small and medium enterprises in Hubei Province's ability to choose a bank on credit basically increased with the increase of firm size; the selection force on private financing is reduced as firm size increases.

View from the Stage, select the bank credit for SMEs in Hubei Province's ability to basically means time with the business continuity and enhanced; and the choice of private financing with the force of the business continuity and reduce time.

From the ownership point of view, way of bank credit for SMEs in Hubei selection force descending order were as follows: foreign-funded enterprises, joint-stock companies and private and individual enterprises. And the choice of private financing arranged in descending order of power: the private individual enterprises, joint-stock companies and foreign-funded enterprises.

It is noteworthy that, as a business, it sets stage of development, size, type of enterprise, ownership and other factors in one, they are not independent, separate financing options for SMEs to play a role, but the interaction of these factors and other factors Or for the causal interaction, reinforce each other, conflict and the course of the game, and become the reality of the results of financing options.

Based on the above conclusions, we believe that banks and other financial intermediaries, should be for different types, size, ownership and financing of SMEs development phase characteristics of the credit market segmentation, development and implementation of different credit financing strategy, design different credit products to meet their "difference" of the financing needs; and a decision on the fate of financial development of civil government, they have to conform to "the people" intended to strengthen the norms of private financial management and effective guidance, focus on innovative private financing system, effective mobilization of private capital, so that it could solve the financing difficulties of SMEs, a breakthrough in getting loans.


[References]
[1] Raymond W · Smith book, Pu Shouhai translation: Financial Structure and Financial Development [M]. Beijing: China Social Press, 1993.

[2] Wang Junshou: more than a multi-pronged strategy simultaneously, together solve the financing problems of SMEs [J]. Financial Times, 2009 (10).

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