The Impact Of Financial Development On SMEs' R&D Investment

SMEs is the foundation of“Public Entrepreneurship and Peoples Innovation” for the state and have an irreplaceable role in speeding up the technological innovation and promoting economic growth. It is urgent need to fully mobilize the important role of SMEs in the implementation of the innovative development under the background of China economic transformation. As an environmental factor of enterprise R&D behavior, the way that financial development affects R&D investment is an important issue of promoting SMEs development. According to the study of this issue and relevant conclusions, this essay proposed suggestions and supplied the basis for establishing the innovation incentive mechanism and ameliorating the financial market environment by goverment.In this essay, according to the recent literatures and related theories, and based on the differences in the level of financial development in different regions, we discussed the effects of financial development on SMEs' R&D investments.Specifically, we chose the data of the listed companies on Small and Medium Enterprise Board from the year of 2009 to 2014, then empirically analyzed the impact of the region's financial development on the SMEs' R&D investment, and in turn, we classified the samples on the basis of the differences of property right, region and industry, and researched the impact of financial development on the SMEs' R&D investment specifically.The conclusions of this study can be summarized as follows: Financial development can alleviate the financing constraints faced by small and medium sized enterprises, and thereby affect their R&D investments positively. The effect is more remarkably for enterprises with small size. From the perspective of property rights,financial development can significantly promote the development of non-state-owned small and medium enterprises, but the effect is not so significant on state-owned small and medium enterprises. Finally, from the perspective of industry, financial development can significantly promote the R&D investments of the SMEs which belongs to high-tech industry such as technology-intensive manufacturing industry and knowledge-intensive service industry, but impeding the R&D investments ofSMEs in ordinary manufacturing industry,while it is not so obvious in promoting the SMEs' R&D investments in ordinary service industry.Based on the above theories and empirical analysis, this essay presents some suggestions include improving the degree of information disclosure of SMEs,adjusting the service concept for financial institutions, deepening the reform of financial system by government.