On the Development of Credit Guarantee System of Mid & Small Corporations and the Role of the Government

This paper analyzes the development and reformation of China's credit guarantee system.According to most western scholars' theoretical analysis,the reason why credit guarantee is needed in credit market is that credit guarantee can alleviate the dilemma of information asymmetry in credit market effectively,ensure holders are not or less affected by the loss of interests,ease credit rationing in credit market,transfer the borrower' information and strengthen credit debt.Credit guarantee system has been established since early 1990s.A pattern of one body,two wings,three layers has formed.However,the development of credit guarantee system falls into a dilemma at present.Based on the characteristics of China's mid small corporations,the writer of this paper suggests that we should vigorously develop mutual credit guarantee institutions,reduce the market share of policy guarantee institutions,establish a new system of mutual credit guarantee and the government should choose the appropriate ways to promote the development of mutual credit guarantee institutions.