The Credit-Increasing Mechanism of Small and Medium-Sized Enterprises: Evidence from Taizhou’s Credit Guarantee Fund
Jingwen Yang*, Li Zhang*, Bing Xu*, Chengbin Wang**, and Hsin-Chih Lin***
*Research Institute of Econometrics and Statistics, Zhejiang Gongshang University
18 Xuezheng Street, Xiasha Education Park, Hangzhou, Zhejiang 310018, China
**Micro-Finance Institute Zhejiang (Taizhou), Taizhou University
No.1139, Municipal Avenue, Taizhou, Zhejiang 318000, China
***Research Center for Educational System and Policy, National Academy for Educational Research (NAER)
No.2, Sanshu Rd., Sanxia Township, Taipei County 237, Taiwan
Increasing the credit of small and medium-sized enterprises (SMEs) is the key to solving SMEs’ financing difficulties. Because of their small size and fixed assets, it is not easy for SMEs to get loans from mortgage or private guarantee institutions. Therefore, to alleviate the credit rationing faced by SMEs and reduce financing cost, the key is to increase corporate credit score. This study uses small and micro-businesses’ data from Taizhou city to identify the key factors affecting corporate default. The results show that enterprise scale, enterprise operation status, financial environment, and credit-increasing means are the key factors affecting enterprise default, and credit protection funds do not play a significant role. Therefore, it can be argued that at present, the credit growth of SMEs still relies mainly on fixed asset mortgage, while the role of credit protection funds needs further refinement to effectively assist SMEs to solve difficult and expensive financing.
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