Abstract

The credit guarantee system for small and medium enterprises (SMEs, here in after) has been established for
more than 10 years in China. There are so many problems resulting in low-effective operation of the credit
guarantee system, such as the risks share and amplification multiple of guarantee determined by financial
institutions and guarantee organization to reasonably are unreasonable. Aiming at these, this article gave an
analysis framework of the effective operation of credit grantee system for SMEs, and then took Shenzhen as a
case to analysis. Here we demonstrate that, the effective operation of credit grantee system for SMEs in China
dependent on the improving of fund indemnity mechanism, especially the government should provide an
institutional environment to encourage SMEs’ own innovation.

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