Research On Influence Factors To Financing Choice Of Small And Medium-Sized Enterprises In China

Small and medium-sized enterprises in China are facing the serious financing problems. According to the survey, the SME bank loan makes up only 22.5% of the loan balances of PRC commercial banks, after the tight monetary policy, the proportion is down to 15%; the direct financing of SME is about 2% of its total funds. The funds required for the majority of small and medium-sized enterprises depend on their own accumulation or getting from the folk lending. Compared with large enterprises, the financing options range of SME is very narrow, the choice ability of financing is very limited, so that heavily hamper their rapid development, especially in the current global financial crisis, the problem of SME' financing options is becoming more prominent. So, clarifying the main factors impacting on SME financing options has the theoretical and practical significance for government finance policy formulation and SME financing decision-making.Based on the traditional theories, such as "MM Theory", "Pecking order theory", "Asymmetric Information Theory", " Financing Cycle Theory", "Financial Penetration Theory"and"Institution Change Theory", this thesis puts forward an influence factors of the financing choice proposition. Firstly, it reviews and gives a brief comment on domestic and foreign literatures; secondly the article, considering the main factors which influence capital supply and demand as the point of tangency, analyses the influences of financial system change, corporate governing structure, type of enterprise, regional differences, corporate growth, ownership form, information production and financing risk as well as financing cost to SME'financing choices, revealing basic characteristics of different firm individual traits in selecting financing ways. Then, the paper makes the financial choices of international comparative analysis taking the United States and Japan for example; lastly, checking the influences of financing options with the descriptive statistical methods and regression analysis, taking the small and medium board listed companies for example.Referring to the descriptive statistical analysis, this paper studies the differences of China's listed companies in profession, regional, ownership and growth, as well as the financing preference affected by financing costs. The study reveals their profession regional, ownership and growth characteristics of financing choices. Referring to the regression analysis, this paper checks the influences of the enterprises'growth to endogenous financing and equity financing with a multiple regression model, based on the panel data from 2006 to 2008 of 80 enterprises listed on the Shenzhen Stock Exchange before December 31,2006. This paper mainly examines the impacts of growth index, such as total asset turnover, return on equity rate, main business revenue growth, total assets growth rate, on endogenous financing, bank credit and equity financing. The article also tests the effects of size, industry and regions to these financing methods, and analyses the relationships between the financing ways and factors related above. The regression results indicate that growth impacts financing choices of medium and small listed companies, but the impacts are different on different financing modes. There is positive relationship between endogenous financing and return on equity rate net, as well as main business revenue growth rate. And endogenous financing is negatively related to total assets growth rate and firm size. There is positive relationship between bank credit and net capital gains rate, the same to firm size. Equity financing is negatively correlated to total asset turnover and net assets yield rate. The regression results also show that financing options of small listed companies have obvious differences in industry-based and regional. Endogenous financing of companies in the western region is higher than that in the eastern and central regions. And the manufacturing industries are higher than the information technology industry. Endogenous financing of the manufacturing is higher than the information technology industry. The former tend to choose bank credit, and the latter is more preferred than the manufacturing in the external equity financing.This paper checks the influences of risk factors to equity financing and the influences of information asymmetry factors on bank credit financing. Results showed that equity financing is negatively related to asset-liability ratio, interest expense ratio and net operating cash flow per share. Bank credit financing is positively related to the fixed assets and intangible assets, but negatively related to to listing years of transactions.