Analysis Of The Impact Of The Shadow Banking On SME Financing

Abstract: This paper begins with an overview of the SME financing and the shadow banking theory,then it analyzes the impact of the shadow banking system on SME financing and the problems existing in the shadow banking of SMEs financing,finally,it proposes policy recommendations based on SME financing shadow banks from the point of view strengthening the shadow banking supervision and adequate play to the role of the shadow banking in the middle of SME financing.

Keywords: shadow banking; SMEs; financing transactions

I.An overview of SME financing and the theory of shadow banking

1)Basic theory of SME financing

SME finance theory has gone through three major phases, namely the early capital structure theory, the modern theory of capital structure and the new capital structure theory.Early theories of capital structure mainly refers to the theory of net income and net operating income, net income theory is that due to the cost of corporate debt is generally relatively low, so the use of responsible companies can reduce costs,net income of enterprises bonds will continue to increase with the expansion of the capital, the final value of the business will also increase,net operating income theory: the weighted average cost of business will not be affected by corporate financial leverage, and therefore the value of the business will not be affected by capital structure,only the value of the business enterprise net operating income theory would produce a critical influence.

Modern capital structure theory mainly refers to the MM theory which proposed by Miller and Modigliani,Its main contents are:there is no relationship between the structure and value of the business capital of the enterprise in perfect markets,generally speaking, the business assets of the enterprise depended on the actual value,rather than determined by the value of the market.The new capital structure theory includes the signaling theory, pecking order theory, corporate financial growth cycle theory.Signaling theory suggests that companies can enhance corporate profitability and risk transfer coordination through the capital structure, as well as affect the stock market valuation information,therefore,companies are often able to achieve increases in the debt capital undervalued,and companies are often able to achieve an increase in equity capital when overvalued;Pecking order theory put forward: companies often pay the cost higher when carrying external capital financing, and debt financing costs is lower than the cost of equity financing,therefore, enterprises should prefer internal financing, which will reduce to pass the adverse information,If companies want to select external financing, it should choose to issue bonds, borrowings and the issuance of convertible bonds for financing mode.Enterprise Financial Growth Cycle Theory put forward: firm size and financial requirements of enterprises is the basic structure of the factors that affect corporate finance,corporate funding needs and financing capabilities are different at different stages of the growth cycle,whcih resulted in the financing structure also has a corresponding change.

Secondly, take the appropriate regulatory path to shadow banking regulation,strengthen benign cooperation between the shadow banking and regulators,we can carry out strict supervision to shadow banking itself, identify the shadow banking credit system through rational analysis,and incorporated into the scope of regulation, continue to advance regulatory reform of the shadow banking system;Meanwhile highly regulated the shadow banking-related financial activities,regulators can make the appropriate regulation to the market by the shadow banking activities and financial instruments in order to achieve effective control of financial risks.

2)Give full play to the positive effect of the shadow banking in SME Financing

Strengthening the construction of credit system for SMEs to achieve seamless between SMEs and shadow banking, to solve the problem of information asymmetry between the them,on the one hand, shadow banks should have strict information disclosure system,strengthen supervision of their own as well as SME financing services;On the other hand, SMEs should be reasonable the scientific order, rating on finance information, build a sound credit system reasonably to effective control shadow banking finance information, thereby reducing financing risks.Secondly, to strengthen security mechanisms to build trust shadow banking, continue to achieve sound financial structure system, strengthen the security support structure to provide adequate guarantees for SME financing to provide a reasonable cost, efficiency and efficient financing services; regulate the shadow banking microfinance model to reduce the risk of SME financing a variety of sources for financing small and medium enterprises to provide quality support services to guide its reasonable security financing.Third, guide the healthy development of non-private lending, establishing the legal status of various financial institutions and lending institutions, clearfy the powers and duties between them and SMEs,provide a good environment for development, while improving on the various financial institutions regulatory mechanisms and risk management to resolve potential financial risks.Finally, encourage innovation and development of various financial, provide more products and services and risk management tools for SMEs financing, so as to solve the sustainable development of SMEs financial bottlenecks.

References

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