A Research On The Financing Capability Of Minor Enterprises In China

Minor enterprises are an important component of our national economy and a vital carrier of the measures of encouraging people to start their own businesses and make innovations. Minor enterprises shoulder the responsibilities of boosting the economy, improving market diversification, making scientific innovations, solving the problem of employment and maintaining social stability, etc., besides, the development of minor enterprises performs a huge influence on the transformation of economic development pattern and the improvement of national competitiveness of the country. Minor enterprises have gradually become the new force of assisting the economic boom of our country and they possesses a vital strategic status in social development. With the development of our market economy, minor enterprises seem to be welcoming their golden age, while a great number of following difficulties have also placed them with severe challenges, and the first and foremost is the financing problem which has caused certain financing incapability of minor enterprises. There are several reasons which lead to the financing incapability of minor enterprises: first, not only do minor enterprises have small scale, but they have relatively weak capital strengths, high risks in credit, defective financial regulations etc., which lead to their serious incapability; second, sever assymetry of information and resources exists between banks and enterprises. The financing needs are gross while the market supplies are of serious shortage, which also holds back the smooth running of financing process of minor enterprises; third, the financing channels of minor enterprises are single, mainly through bank advance, but the information assymetry prevents the financial institutions as banks from providing more chances of bank advance for minor enterprises, and consequently leads to the financing incapability of minor enterprises in our country. Overall, the financing incapability of national minor enterprises results from both inside and outside. Basing on the empirical analysis of the financial data of minor enterprises, the article aims to research on the major factors that influence the financing ability of minor enterprises and according to the empirical results, find out the concrete reasons of financing incapability of minor enterprises and give corresponding solutions and suggestions respectively from the perspective of enterprises themselves, the government as well as financial institutions.Concretely speaking, the article consists of seven parts. First of all, it includes the introduction, which illustrates and introduces the background of the selected topic, the research purpose and significance as well as the research methods. Secondly, the article arranges the national and international documents to provide a basic understanding of fundamental financing theories and the financing difficulty as well as its reasons of minor enterprises at home and abroad. It is followed by the comprehensive research on the financing situations of minor enterprises combining actualities in China, mainly including the current status of the financing of minor enterprises and the contents about the their financing incapability as well as the causal analysis. From the perspective of classic financing theory, modern financing theory and the new theory of financial institutions, the article then performs a detailed analysis about the guiding significance of the theories above towards following contents of the article. This part of the article lays the theoretical basis of the following hypothesis and empirical analysis. In view of the above theoretical basis about the financing structure, the article puts forward the influential factors towards the financing incapability of national minor enterprises from the perspective of financing structure, and proposes the hypothesis and deduction in terms of these factors. Next, the article picked the annual report data of nearly 1,300 NEEQ(National Equities Exchange and Quotations, especially designed for private minor enterprises) market making enterprises and performed the empirical studies. Through building multiple regression model, it obtained the degree of correlation between several variables and the financing ability of minor enterprises. Last but not least, in line with the empirical studies above, it comes to the research conclusion. Combining the national fundamental realities, the article proposes solutions and suggestions from the perspective of the enterprises themselves, the government and financial institutions, meanwhile, it also put forward a corresponding vision of the defects of the article, holding expectations for further studies and richer research results.