Empirical Study On Influence Of Law Protection For The SME Financing Efficiency

SME is becoming more and more important in China economy, and the problem of financing efficiency has always been the bottleneck for the development of SME. At present, the research for law and finance shows that: the law related to the legal system for investor protection affects the financing structure and financing cost, improving the legal protection for investors and SME financing efficiency, which means it has a positive correlation. Investor protection of the law affects only the direct financing in enterprises, but there are two ways of financing for enterprises, therefore, this article defines the creditor right as an indirect way affecting enterprises financing, and the related legal system improvement will inevitably affect corporate financing structure and financing cost, then affecting the enterprises financing efficiency.This article systematically analyzes the influence of law on enterprises financing efficiency from the perspective of the way for enterprise financing. Different from current study, which only considers the law of investor protection, this article refers to the influence of law protection for investor, creditor right protection, and legal system environment on the enterprises financing efficiency. On the basis of analyzing the elements of law protection system, this article discusses the influence of law protection system on enterprises financing efficiency, after which, this article established a multiple linear regression model, using semi-annual financial data of 39 listing minor enterprises from 1994 to 2009, to do empirical study.There are two conclusions after theoretical analysis and empirical study:(1) There exists positive correlation between financing efficiency for SME and law protection system including law protection for investor, creditor right protection, and legal system environment, implying that the financing efficiency for SME will gradually improve with the development of creditor right protection and law protection for investor.(2) Only when law enforcement is efficient, law system environment can then influence SME financing efficiency.