Determinants Of Financing Behaviors Of Small And Micro-enterprises In Xiangtan Rural Areas

Small and micro-enterprises in rural areas include small enterprises, micro-enterprises, cottage industry enterprises and individual business. Since the reform and opening policy30years ago, the small and micro-enterprises in rural parts have been developing significantly and have played an important role in boosting rural economy, upgrading agricultural industry structure, advancing agricultural product’s technique and skill innovation, transferring rural workforce, improving rural residence’s income and life, etc. Whereas, rural part normally receives less attention compared with the urban area. Besides, small and micro-enterprises belong to the inferior economic sector. The major impediment to this scenario is the severe shortage of finance.The paper narrows the research region to Xiangtan rural areas, sets the object of study as small and micro-enterprises in rural areas and meant to find out the determinants of firm’s financing preference. In order to ensure the authenticity and accurateness, the writer adopts the structured questionnaire to get the first-hand and the most real data source from firms and also get information from the authoritative departments. At the same time, the writer also talks to entrepreneurs to inquire information about their companies. At last, the multivariate logistic regression model is also used to analyze the sample data to get the final results. The results show that:among the internal determinants, incorporation of the firm, age of the firm, industry, firm’s profit status, firm’s financial statement, firm’s collateral as well as the education level of firm’s operator are the factors that will determine the firm’s financing behavior and financing preference. Among the external determinants, macro-policies, financial institution’s policies, financial threshold and financing services will determine the firm’s financing behavior and financing preference.In the end, based on the questionnaire data, empirical results and realistic scenarios, the paper analyzes that it is important for small and micro-enterprises in rural areas to strengthen itself at first place. The macro-policies, such as monetary policies, credit policies should help those enterprises get easy access to financing. Besides, the paper also advises to improve the financing services, provide more financial products, build well-organized informal financing platform in rural areas, creating a positive financing environment and etc. Only by implementing these methods, we can truly promote the development of the small and micro-enterprises and thoroughly solve the financing constraints faced by small and micro-enterprises in rural areas.