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Owing to limited scale of business, weak organizational structure and non-transparency in financial statement, it's not as easy to obtain financing for small or medium enterprises as big enterprises.
Banks whose funding policy is based on the enterprises' financial quality and risk control management dare not make loans to small or medium enterprises. Banks are willing to make loans to the enterprises only in the condition that the enterprises provide their collaterals to ensure the creditors' right.
In view of past global financial turmoil, European debt crisis and domestic financial crisis, the government implements quantitative easing to boost economic growth, thus raising the prices of real estate and financial assets and lowering their yield, while simultaneously increasing the money supply. Our study suggests that small or medium enterprises providing real estates as their collateral, with the upward trend in the valuations on real estates, will be offered more credit from the banks. Our study analyzes the relation between balance of the loan to small or medium enterprises, proportional share, balance of the loan to real estates, and real estate prices with a basis on respective data and figures.
Study results find that the banks often request small or medium enterprises to put their real estates in pledge for a loan before being granted credit facilities. In other words, the amount of loan balance increases while evaluation of real estates increases. The banks enlarge their guarantee loan size in a flourishing real estate market. The phenomenon testify our study's inference that corporate loan has positive relations with prosperity of real estate market.
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