The Research On SME Financing In Emerging Markets

Small and medium-sized enterprises play an important role in the development of economy of the emerging market countries. The significance of small and medium-sized enterprises to job creation,"scattered resources" integration is outstanding, which helps to promote economic growth of emerging markets; also the inherent operational flexibility and competitiveness of small and mefium enterprises improves the economic vitality of emerging markets, and promotes the formation of market mechanism and the transformation of national economic system. Besides, the outstanding learning ability and creativity of small and medium-sized enterprises, promotes technological advance and industrial upgrading of emerging market countries, which helps emerging market countries to establish and giving full play to the comparative advantage in the international market. However, compared with those from developed countries, small and medium-sized enterprises in the emerging markets are faced with more serious development constraints, significant part of which involves financing. Most studies about SME financing attribute the obstacles and constraints of financing to firm characteristics, such as information opacity and information asymmetry. But for factoring the financing difficulties of SMEs in emerging markets, the external financial environment must be given more weight. In emerging market countries, economic system is in the transition period, the imperfection of market economy system, the under-development of financial market system, the lack of supporting systems such as legal system and credit system, and the excessive government intervention in the economy, constitute the special financial environment of SME financing, causing the SME perform differently from those from developed countries.This paper studies the SME financing in emerging markets from the perspective of external financial environment. We initially studied the factors affecting the SME financing in the direct financing environment, which refers to the structure and competition of banking market and the informational environment. We set up a theoretical model the study the mechanism of these factors jointly. We then tested such mechanism in emerging markets using the data from the World Business Environment Survey, which contains the financial information of over90,000firms from119emerging market countries, along with the finance environment data from the World Development Indicator (World Bank). Next, we used the same data to analyze the role of indirect finance environment factors. At last, we focused on the special factors in China, and used data from the Industrial Enterprise Database of China, the EPS and WIND Database, to study the role of such foctors. We got three main conclusions. In general, most of the enviromantal factors investigated in this paper, either the direct factors or the indirect ones, affects the SME financing significantly. But the relative significance and mechanism of factors are different one another. Besides, the idiosyncrasy of Chinese SME financing lies in the under-development of financial marketization.The content of this paper is as follows:Chapter1is the introduction of this paper. This chapter coverd the background and research significance of this paper, along with the logical framework and research methods, etc.In Chapter2, we reviewed and summarized the related literatures. We classified the literatures into three categories, including the literature studies the SME financing from the macro perspective, from middle perspective, and from the micro perspective.In the third chapter, we analyzed the SME financing from the perspective of firm characteristics. We provided a general conceptual framework, in which the firm size, informational feature, funding demand, operational risk, corporate governance structure, and financing behavior are analyzed jointly.From Chapter4to Chapter6, we investigate the environmental factors which affect the SME financing directly.In Chapter4, we discussed about the role of banking structure and informational environment. Firstly, we discussed the behaviour of bank in SME financing and the relationship between the market structure, competitiveness of banking sector and lending choice of banks. We than analyzed the role of imformation in this relationship. Secondly, we investigated the effects of informational environment characteristics on SME financing.In chapter5, we set up a theoretical model to analyze the mechanism of the factors discussed above, by which we can study the relative importance of these factors, also we can analyze these factors jointly.In chapter6, we then tested the effects and mechanism of these factors in emerging markets using the data from the World Business Environment Survey, which contains the financial information of over90,000firms from119emerging market countries, along with the finance environment data from the World Development Indicator (World Bank).From chapter7to chapter8, we analyzed the indirect environment factors in both theoretical and empirical ways, which gives the explanation to the role of financial, economic and institutional factors, and we perform the empirical tests using PROBIT and OLS mathods.Chapter9is about empirical study of the special environment factors in China. We applied both pooled OLS regression and panel data model regression methods, to perform a batter investment of the idiosyncrasy of Chinese SME financing. By the comparation of empirical results from China and the whole population of emerging markets, we conclude that, the idiosyncrasy of Chinese SME financing lies in the under-development of financial marketization.Finally, in chapter10, we summarized the conclusions and policy implications of this paper.