The Effect Of Economic Policy Uncertainty On SMEs' Investment Spending

Since the reform and opening up,the sustained and rapid growth of Chinese economy has been maintained for more than 30 years.During the period of economic restructuring,the role of the government remained prominent.Since 2008,the growth rate of China's corporate investment has declined continuously,the volatility of investment has been high,and the unpredictability of investment income has continued to increase.In response to downward pressure on the economy,the government has frequently changed the economic policies.As a result,the uncertainty of economic policy once became the focus of mainstream economics school again.Moreover,at this stage,SMEs are greatly supported by the state.With the market reform,the dominant position of enterprises for the investment is obviously being strengthened.Therefore,it is particularly important to explore how SMEs make investment decisions when economic policies are unexpected.This article has begun with the uncertainty of economic policy as the starting point and examines its impact on the investment of SMEs,and then finished the review of the uncertainty of economic policy,the theory of investment in SMEs and the results of empirical research.This article analyzed the current situation of the impact of the uncertainty of economic policy on the investment of SMEs in China from two aspects: the uncertainty of economic policy and the investment of SMEs.At the same time,using the data about China in the uncertainty index of economic policy formulated by Baker et al.,based on the data of SME board manufacturing enterprises in our country,the econometric model has been established to test the impact of economic policy uncertainty on the investment spending of SMEs in China.The empirical results showed that the frequent fluctuation of economic policy has an objective impact on the investment of SMEs,and the uncertainty of economic policy has a negative impact on the investment of SMEs by affecting the investment cost,investment value and expected return of SMEs.And the uncertainty of economic policy is high,while the level of investment in SMEs is obviously reduced.Moreover,as the large shareholders' shareholding affects the use of corporate investment funds,the corporate investment with a large proportion of major shareholders is more affected by the uncertainty of economic policies;and corporate profitability can ease the impact of economic policy uncertainty on corporate investment.Therefore,to stimulate the investment of SMEs by changing the current economic policies,the government should also pay attention to the negative impact of the policy uncertainty caused by the frequent changes in economic policies on the enterprises' investment.The study on the impact of investment in SMEs on the uncertainty of economic policies can not only make targeted suggestions on reducing the uncertainty of economic policies,but also can provide new research ideas for stimulating the investment of SMEs.