Literature review

With the continuous development and expansion of SMEs in China, financial issues of corporates have been exposed in the development process, so more and more domestic
scholars have researched on informal finance correspondingly. Combining with our nation conditions, Chinese scholars analyze the problems of SMEs and the informal
finance from various aspects of finance roughly. In the European Union, for example, new regulations pertaining community acts and funding programs were amended which
allowed small and medium enterprises to be granted more of national and regional aid than large companies(Riding, 2007).
In theory, the theory of financing problems of SMEs mainly include capital structure theory, credit rationing theory, relationship lending theory and so on. These
theories and hypotheses are mainly aimed at the serious information asymmetry problem which exists in the financing process of SMEs. These theories give an economic
explanation to the financing predicament of SMEs. The moral hazard and reversed selection caused the problems of information asymmetry between banks and enterprises,
which making the size of bank loans no longer a function of interest rates (Stiglit &Weiss, 1981).
In the empirical aspect, some scholars have carried on the research of the influence of the bank merger and acquisition to SMEs in the financing market. The merger of
the big banks will reduce the loan to small businesses, while the merger of small banks will increase the loan to small businesses (Berger, 1998). The study believes
that the size of the loan will not decline because of the decline in the size of the bank, SMEs’ loan interest rates will be relative low in the dominated market by
the big banks (Rosen Bergen & Udell, 2001).