SMEs, given that they are not capable to finance themselves in the course of kept earnings or equity financing(Cook, 2001; Whincop, 2001). In the face of the fact that financing is a foremost reason for development of SMEs, various studies and government reports around the world have documented that SMEs face problems whilst accessing to bank finance. even though, a significant number of research studies and government reports have confirmed that the access to finance has been a foremost problem in the SME sector, a review of the literature in relation to this area points out there is a noteworthy gap in facts the problems of accessing bank finance by the SMEs in developing countries, counting China.
Smaller the enterprise, there is high risk entailed for the reason that such enterprises have high collapse rate comparing larger enterprises. For illustration, Schiffer and Weder (2001) conducted a study with the sample of firms across various countries and revealed that there was a negative relationship amid the size of an enterprise and the risk it may pose for a lending bank. On the other hand, Lopez- Gracia and Arias (2000) find that that the SMEs possibly will themselves limit their financial formation with the plan of staying away from the necessity to divide up power of the management with organisations. A number of studies are obtainable in the literature that examines the factors of bank financing and credit. Nevertheless, these studies are restricted to one group of determinants and do not present a general representation of factors of access to credit. For illustration, numerous studies have utilized human capital theory and have applied demographic changeable of the owner/manager of SMEs whilst accessing credit from banks.