Game model analysis of SME financing

Abstract: SME financing is constraining innovation and technological achievements into technological constraints, the root cause of this phenomenon lies in the financing market, the two 'mismatch', function curve by building small and medium enterprises financing, policy recommendations, effectively improve the 'mismatch' phenomenon, promotion of SMEs carry out technological innovation.

Keywords: SME, finance, modeling, countermeasures

Business is technological innovation, SMEs are the main driving force of technological innovation [1]. However, the prevalence of small and medium enterprises financing difficulties phenomenon, as a constraint to the development of SMEs of the potential constraints. This paper on the financing difficulties of SMEs to analyze the root causes, through modeling, to find the crack of the policy.

1 Advantages and innovation in SMEs financing difficulties

Typically, large companies with financial and industry technical advantages of integration, through the acquisition of innovative SMEs to continuously inject vitality into the development of their own, such as the World router giant Cisco, the famous pharmaceutical company Pfizer, and Siemens, Philips Pu and other companies, are continuously integrated in the technical achievements of SMEs occupy a leading position in the industry, while SMEs are more willing to take risks, have the inherent advantages of technological innovation, Schumpeter's research shows that compared with large enterprises, SMEs In carrying out technical innovation has a flexible organizational structure, competitive pressure is easier to accept the innovation, efficiency and innovation in the innovation of time better than the characteristics of large enterprises [3] Research shows that SMEs technological innovation per capita higher than large enterprises 2.5 times the time to market new technologies large enterprises less than 1 / 3, American scholar Scherrer etc. The study also shows that the promotion of technological innovation, the role of SMEs greater [4] In fact, our patented 66% are SMEs invented more than 74% complete technical innovation by SMEs, 82% of new product development by SMEs [5], the strategic development of emerging industries depends both on large enterprises a strong base in R & D and strength, but more dependent on small and medium enterprises, especially SME's daring and revolutionary technological innovation as the engine driving the development and growth of new industries, as the State Council Development Research Center of the former party secretary Chen Qingtai said: 'SMEs are not strong development of new industries can only be a false fire. '
However, SMEs in emerging industries face serious financing bottlenecks, the performance of SMEs access to bank credit ratio is very low, only about 10% of all SMEs in the U.S. compared to 33%, about 1 / 3 of the small enterprises need financing from non-formal channels, about 50% of the SMEs can not rely on external financing to solve this problem .2008, state-owned bank loans to SMEs accounted for only 0.8% of its total loans [6]. SME funding chain scission directly affects their R & D, achievements transformation and industrialization of other sectors, as a breeding and development of strategic new industries, the potential constraints to achieve economic transformation.

2 the root causes of the plight of the emerging industry financing models and strategies

For the new industries of financial difficulties, particularly because of difficulties in financing small and medium enterprises, domestic scholars have done at different levels of which are more representative of the views are, in our current state-owned commercial bank-based financing system, First, banks and SMEs, information asymmetry, resulting in a lemon market effects, leading to shrinking loan market, and second, the threshold is too high capital market financing for SMEs, SMEs in their quality varies third and fourth, financial services system is not sound [4,7-10], but few people causing difficulties in financing small and medium enterprises in emerging industries done to explore the root cause, through lack of investment and financing model to build on existing measures to give theoretical explanations as the basis for seeking a solution. This paper attempt to finance the fundamental interests of market players as a starting point for the study to supplement the lack of work.

2.1 Financing the decisive factor in the market

SME financing in emerging industries on the market, there is a small and medium enterprises, governments, financial institutions, the three main forces. Financial institutions as the main technology supply side of the financial system, its core interests in the financing system to achieve capital appreciation, acquisition and risk relative to matched gains, the financial institutions involved in science and technology the main driver of financial market. enterprise as a financing side, the core interest is to minimize the cost of access to research and development, transformation and industrialization of the necessary funds the Government is committed to promoting science and technology by small and medium corporate finance and risk control for financial intermediaries to provide the business platform and, thus, improve the employment rate, promoting scientific and technological progress and economic stability and development of positive social externalities.

Clearly, as both lenders and borrowers and financial institutions, businesses, the core of the financing market, can prosperity lies in the financing market companies and financial institutions to achieve their goals, achieve win-win situation, namely, financial institutions and the availability of risk match income, enterprises can obtain financing at low cost in two ways. The needs of either party can not be met, will definitely lead to weak financial markets while financial institutions can be approximated that the equivalent income to pay the cost of financing business, and financial institutions to assume the risk can be approximated by the surface is equivalent to corporate of risk, so the size of the financing market that depends on the risk of new industries and financial institutions for SMEs gain when business risk is too high or too low returns of financial institutions, financial markets will gradually shrink. risks and income is a decisive factor in the financing market, thus starting to build the model, it is easy to financing difficulties of SMEs in emerging industries to make a reasonable explanation.

2.2 caused by the financing of new industries and the root causes of the plight of the model building

Cause difficulties in financing new industries reflected in the financing market, the root causes of the two 'do not match.' First, the risk is too high for SMEs, while the bank rate of return is too low, the risks and benefits 'do not match.' SMEs, particularly in emerging industry, SMEs, facing a great risk, low probability of surviving companies in the United States, emerging industry SMEs for new 4-year survival rate is about 50%, 8-year survival rate of only 30%, even in the companies receiving venture capital, but also only about 20% of the profits eventually survive. scholars believe that these figures will be lower in China .2008, non-performing loan rate of SMEs in China 11.6%, over the same period the average non-performing companies lending rate of only 2%. At the same time, the impact of the financial control, financial institutions, especially the yield of the banking system is severely restricted. Free markets, financial institutions need to price risk, in order to achieve a balance between supply and demand, due to China's central bank interest rates and prices are higher than stringent requirements of the benchmark lending rate, floating rate loans and a very limited range in the implementation of market-oriented interest rates can not be the case, bank lending to SMEs is difficult to realize the risks and benefits on the other, and thus a shortage of contradictions, resulting in financial assets can not be the most optimal allocation in China's Shanxi and Inner Mongolia Erdos and other places, private financial (commonly known as the active usury interest rate cap from the side shows the constraints on SME financing, the central bank to consider the recent liberalization of civil lending rates, to achieve private finance is the sun of the evidence on this issue.

Risks and benefits of conflict resulted in not all high-risk businesses can be financed from the financial market, only those who risk their own risk tolerance and financial institutions the ability to match the business side may be from the market financing. We call this the possibility of financing the collection known as market financing potential as shown in Figure 1, the horizontal axis, said enterprise risk, financial institutions, the longitudinal axis of said income, based business risk is x, the ideal situation, according to the risk of small to large enterprise sort, then for each given a certain risk of a corporate financing behavior, and the corresponding bound to find a bear the corresponding risks to financial institutions, is set to y, complete the financing, so that they form a to-one mapping relationship is function
When assuming any point on the horizontal axis corresponds to the number of firms constant q, the amount of business each fixed p, the financing (the assumption does not affect the analysis of the problem
Figure 1 is based on equation (1 (2 to the potential financial market function curve, is the area enclosed by the potential market for financing of which point to o o 'point system for the SME risk, o' points to a point that ordinary risk of exposure to small and medium enterprises (non-existence of the actual situation of SMEs in emerging industries is much greater than the risk situation of SMEs in emerging industries, but on the whole in terms of emerging industries is greater than normal risk of SMEs SMEs as an ideal model, here ignore this exception, a point to the m-point indicated that they might obtain bank financing of small and medium risk areas of emerging industries, which the sub-paragraph Duiying Quxian, is Chengshou of the associated risk of financial institutions Huode income, m above the risk appetite of financial institutions, said outside the emerging industry risks faced by SMEs.

Function corresponding to the size of the area enclosed by the curve can reflect the potential size of the financing market.
SME financing difficulties caused by the second root cause is a certain risk of certain financial institutions, businesses and there is 'match' the possibility that the loans reached, but due to various objective reasons, it is difficult to achieve 'match.' Because of asymmetric information, when emerging industries in the SME financing market risk tolerance of a range of financial institutions, financial institutions can not meet the screening and identification capacity of the enterprise itself, the financing for these companies is difficult to achieve, or only at higher cost financing due to the risk of not achieving certain business and some financial institutions 'match', which resulted in not all possible financial resources of the company to eventually get financing, only those companies to eliminate the information asymmetry, and ultimately can obtain financing at reasonable cost. we finally obtain low cost financing to achieve the enterprise's ability to finance the collection known as the market so that the actual size of the financing market, as shown in Figure 1 should be less than the potential financial market. corresponding to the function parameters will change, such as the type (3 Actual financing market shown in Figure 2, the discrete entities histogram. Share the free paper download

3 crack new industries the direction of financing and policy options

Through the above analysis, the solutions to SME financing, nothing less than the two ideas, or increase the potential market financing or financing enhance the ability of the market. Corresponds to the graph, that is, either increase the area enclosed by the curve, or increase the bold solid line area and. There are three measures.

First, the function argument values ??from a to m extends to a to m ', corresponding to a curve in Figure 3 increase (dashed line), the expansion curve around the area. There are two solutions, one in the same financial controls context, the introduction of higher risk appetite of financial institutions and strategic investors, can afford and m to m 'points corresponding to the risks, including the introduction of policy banks, to support the introduction of seed-stage companies focused angel funds and VC, to develop security and re-guarantee institutions, the appropriate leverage to improve security, etc. Meanwhile, you can find the introduction of high-risk financial institutions to expand the market potential and financial institutions to expand the existing market potential compared to the marginal benefit is more significant, therefore, increase the risk the cultivation of institutional investors, the introduction of higher risk-bearing capacity of strategic investors, increase high-risk financial product innovation, financial markets can effectively expand the potential of the second is open or financial deregulation, making the existing financial institutions, according to business distinguish between the different risk pricing, market potential so as to achieve the purpose of financing the expansion, including relaxation of interest rate controls, financial institutions so that the original differential pricing, liberalization of financial access, private capital sunshine, make an inventory of private capital, the three is the implementation of universal banking and so on several models.

Second, the variable value function should be total or partial pan up, it raised the height of the curve, the expansion area enclosed by the curve for a certain risk of a corporate financing behavior, financial institutions, is bound to obtain the corresponding revenue and improve function strain values, which increase the risk of certain financial institutions under rate of return, but this part of the proceeds of the burden, not by the companies pay, or that the formation of financial markets lemon effect. but should be set up by the government-funded loans to financial institutions related to fund be subsidies or incentives, subsidies, financial institutions, there is a strong possibility to be superior to government subsidized loans to enterprises, because the loan interest is more effective for individual enterprises can reduce the burden on businesses, but from the resources of the whole community configuration point of view, all financial institutions will compete for this excess profits generated, so the financing market from a seller to a buyer's market, financial institutions will compete to find good loans and mining projects, which make an inventory of the entire financial market, namely Government subsidies to financial institutions have a higher marginal product of leverage and, therefore, the Government may consider loans to encourage financial institutions to increase the risk compensation fund set up, and consider whether the use of loan discount best shown in Figure 4.

For the type (1 and type (2, range from variable degree of overlap increases, increase the physical part of the area, businesses and financial institutions to promote the match, the key is to eliminate the information asymmetry between borrowers and lenders. Financial institution or third party Most of the information for complete information or required to pay a high cost, therefore, as a public institution of government departments, should assume the investigation, information storage and release of responsibility. or to government credit guarantees, to promote financial market development. One continuously improve the capacity of government services, strengthen the organization and various types of promotion, the establishment of new industries SME repository, with periodic distribution technology roadmap, the organization of the key technologies for assessment of human resources, financial institutions, to enhance understanding of the enterprise. Second, the continued improve the credibility of the Government to strengthen the government loan package, to guide the social funds and other leveraged funds transfer effect. Third, the development of credit guarantee agency, to strengthen the construction of third-party credit rating agencies. Fourth, innovative financial products, such as the development of various types of new finance leases business, strengthen supervision and management of the flow of loans shown in Figure 5.

4 Conclusion and Outlook

SME financing is the root cause of the two 'no match', this model by constructing a function to find ways to break the financing problems, the conclusions are summarized as follows, first, the introduction of high-risk appetite institutions or financial deregulation, the second is subsidized financial institutions risk behavior and the third is to strengthen the resolve information asymmetry. future research directions are mainly two, the enhancement of qualitative research, that the ideas and direction, the innovative financial products, the second is to strengthen the quantitative research, and data through the model building analysis of qualitative and quantitative analysis of the product, give a specific adjustment parameters.


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