Research On The Relationship Between Bond Market's Development And Small And Medium-sized Enterprises' Financing

mall and medium-sized enterprises have been playing an important role in China's economic development from all the time.No matter from the quantity and quality of development,small and medium-sized enterprises can be said to have made irreplaceable contributions to China's economic growth.For example,they generated more than 60%of GDP in our country.So,if we want to maintain a steady economic growth and strive for the success of economic development's structural reform under the background of the new normal,we must bring into play the important role of small and medium-sized enterprises.However,financing difficulties have been plaguing small and medium-sized enterprises' existence and expansion.Although they have many sources of financing,but most of them have high requirements and restriction on small and medium-sized enterprises.Since 2015 the government relaxed the conditions for these enterprises to issue bonds,this provided new ideas and new hope for solving the financing problems of these enterprisesIn order to research whether the development of bond market can alleviate the financing constraints of small and medium-sized enterprises or not.This paper reviewed relevant researches,but found out that these is a lack of direct empirical research on this issue.So,this paper planned to use investment-cash flow sensitivity model to do an empirical study on this problemBased on MM theory,Trade-off theory.Asymmetric information theory,Pecking order theory and Agency cost theory,this paper selects 167 small and medium enterprises board listed companies and their financial figures for 2012-2017,then combined with the bond market development index,basic Euler equation is used to verify the data in the final.And the result suggests that enterprises' investment have a strong dependence on their internal cash flow.that means China's small and medium-sized enterprises do have significant financing constraints,but the development of the corporate bond market can effectively alleviate this problem,because the empirical result also shows that a good bond market can reduce the dependence of corporate investment on internal cash flow significantly.After that,considering heterogeneity of enterprise and the degree of monetary easing might have impact on the enterprises' investment-cash flow sensitivity.This paper uses two dummy variables,whether the enterprise is state-owned,whether the enterprise is in the east,and a control variable that measures monetary easing to expand the basic Euler equation.The second empirical result suggests that the development of the bond market has not had a significant influence on different types of companies.and the loose monetary policy environment has not influenced the small and medium-sized enterprises' financing constraints significantly.In the last,combined the theoretical analysis and empirical results,this paper offers following proposals on how to develop corporate bond market to solve the small and medium-sized enterprises' financing constraints.(1)Expanding the size and proportion of bond issuance by small and medium-sized enterprises.(2)Increasing policy support for the small and medium-sized enterprises' bond market.(3)Innovating the types and issuance ways of the small and medium-sized enterprises bonds.(4)Improving the financial system of the small and medium-sized enterprises.(5)Establishing stop loss mechanism to prevent bond default risk.