International Experience for SME Credit Risks Identification: Based on Monitoring-Cashflow Method

Information opacity of small and middle enterprises (SMEs) always leads to great difficulty to identify their credit risk for commercial banks. With the help of combining the results of overseas research, our study introduces the SME credit risks identification technology based on the method for monitoring their cash flow, which takes advantage of banking accounts information. This method contributes a lot to relieving the difficulties of SME financing and banks' credit identification, which is more accurate and cost not that much. We come to the conclusion that commercial banks has effective access to monitoring cash flow situation, such as information from bank accounts or other financial products, to identify the SMEs' credit risk, and finally propose the specifics and approaches that recognize SME credit risks based on monitoring cash flows.