1.1 Background and Rationale of the Study
SMEs have a huge giving in China’s economic development, nevertheless, the financing quandary at present faced by SMEs makes up a big blockage for their development. Banks are unenthusiastic to finance to them, for the most part because of the dearth of security and their underprivileged means in pricing risk. This is the raison d’être why credit certification organizations play a foremost role in SME financing and the precision of the credit guarantee scheme is imperative for upholding their access to credit(Wang, 2004). Ever since reform and liberalisation of Chinese economy , the market-oriented reform of the financial system of the economy has slowly but surely brought about labor and capital markets, which have upheld a crude amalgamation of rich labor resources and more and more extended funds resources. The growth of SMEs, particularly the pointed go up in non-state owned and non-public-owned enterprises, has offered a huge freedom and enduring medium for this sort of recipe. Even though the general dimension of the state-owned economy is yet rising in relation to the quantity of enterprises and developmental likely, non-state-owned SMEs have developed into a foremost division of the economy in China and played a more and more vital role in the development of economy and society (Wang, 2004).