This paper aims to examine the causes of fund-raising difficulties of local small and medium enterprise(LSME) and propose some improvement programs for those difficulties especially in the financial aspects.
LSME and in the chronic lack of funds beca...
This paper aims to examine the causes of fund-raising difficulties of local small and medium enterprise(LSME) and propose some improvement programs for those difficulties especially in the financial aspects.
LSME and in the chronic lack of funds because they raise only 30% funds through citernal financing. They raise about 92% funds through indirect financing. Banks are the main source of funds supply to LSME. But especially in serious depression, borrowing from basis is unfavorable to LSME. And non-bank financial institutions evade making loans to LSME. And the portion of direct financing in fund-raising of LSME is not much. They raise only 7% through direct financing. And large enterprises get mostion 1998 6, 987 of the funds raised by the flotation of new issues and bonds in the Korean Stock Exchange.
Accordingly to improve fund-raising difficulties of LSME, we propose some improvement programs listed below ⓐ LSME have difficulties in access itself to direct financial market., thereforem some rigorous institutional requirements should be satisfied in direct financial market must be improve, for accessibility to that market ⓑ the percentage of obligatory loan to LSME must be raised, and the outflow of local funds must be controlled ⓒ the government must contribute more budget to the trust guarantee funds in order that the percentage of credit loan to LSME can be raised ⓓ the central and local government must give financial support to LSME more actively and effectively of the existing bill system must be improved in order to reduce the possibility of chain or black ink bankruptcy of LSME.