Embeddedness in the acquisition of loans for small and Medium-sized enterprises From the perspective of Hangzhou Municipality

Small and medium-sized enterprises (SMEs) play an important role in our economy, but its fund bottleneck problem has not been solved. The SMEs financing difficultly has becomes a very hot theory problem. Using existing theory and original fieldwork, This paper develops a framework to explain how social embeddedness affects an organization´s loan acquisition and cost of loans, thus get different market influences. The ability of a firm to acquire loan is a result not only gained by the firm´s own characteristics but also the firm´s network structure. Commercial bank industry in Hangzhou has always been competitive. I conducted field researches about the acquisition of loans inside banks, all the interviewees stated that they would fully consider the borrower´s social background and relationship, which illustrate affects of social network to obtaining capital. This paper analyses firm´s control variables inside commercial banks and explains firm´s financing problem from the perspective of structure embeddedness exploringly and innovatively.