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Credit Crunch

In: Business and Management

Submitted By dust002
Words 2181
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Credit crunch and SME financing
----Take China as an example * * Shu Ruochen Noah 4063148 * Yuan Ziting Circle 40631 * Chou Xue Snow 40631 * * ABSTRACT
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SME are always important forces of social and economic development,and they play important roles in optimizing the economic structure, promoting innovation,easing social pressures and maintaining social stability.However, the world crisis was triggered by financial crisis in 2008 in USA, which has great impact on China’s economy, especially on SME.Since the credit crunch, SME are unable to obtain full production and operation funds needed timely,and Bank loans to enterprises are more cautious, so financing of SME will become more apparently difficult.Therefore, in order to solve the financing problems of SME, exploring development mode and long-term mechanisms which is adapt to economic structural has been an urgent strategic issues. * 1. Definition of credit crunch * A credit crunch is a sudden reduction in the general availability of loans (or credit ) or a sudden tightening of the conditions required to obtain a loan from the banks . * A credit crunch generally involves a reduction in the availability of credit independent of a rise in official interest rates . * 2. Background of Credit crunch.
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2008 the financial crisis took place in USA.In order to stimulate China's economic development, the government issued a series of economic policy including a 4 trillion investment plans, reducing deposit and lending rates to response to the crisis.In the good development of domestic economic, the international capital markets has an good expectation on China's economy,so they invest a large number of international capital to China,

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