Research On The Impact Of Charitable Donations On The Formal Financing Of Small And Micro Enterprises

In the post-epidemic era,the China’s Recovery and full employment are inseparable from the healthy and sustainable development of small and micro enterprises.One of the biggest challenges obstructing the development of small and micro enterprises is the problem of "financing constrains".Because of the small scale and weak strength of small,small and micro enterprises lack competitiveness in obtaining formal financing from banks.Second,although the policy requires banks to give more financial support to small and micro enterprises,in reality,banks prefer to "compete for loans" from large enterprises and state-owned enterprises.To solve this problem,small and micro enterprises may obtain formal financing from banks through charitable donations,which are non-market-oriented channels.For one thing,the administration and commercial banks more concerned about the fulfillment of corporate social responsibility.The phenomenon of “donation” occurs from time to time,and the government will also give “real money” incentives to donating companies,so that companies can participate in charitable donations to a certain extent.Considered a "political contribution" and "rent-seeking" behavior.For another thing,out of "altruism" and the "self-interest" motive of strategic charitable donations,enterprises are also more involved in social charitable donations.From the perspective of strategic charitable donations,corporate charitable donations can be regarded as a kind of positive signal transmission,which able to display the good financial condition of the firm and the optimistic judgment of entrepreneurs on the future of the company,so as to ease the Information asymmetry of banks and enterprises.Those will enhance the lending confidence of banks and other formal financial institutions.In addition,charitable donations can enhance consumers’ perception of corporate brands,enhance corporate reputation and brand image,thereby improving long-term business performance and bringing more resources to companies.Therefore,the article tries to research the correlation between charitable donations and formal financing of small and micro enterprises,and on this basis examines the influence of political connections,corporate state-owned assets and financial marketization on charitable donations and formal financing,as well as the intermediary of corporate reputation effect.The sample of small and micro enterprises that meet the research in this paper is screened and sorted,and a total of 4944 observations are mixed.Panel data for regression analyze.The empirical results show that charitable donations are conducive to small and micro enterprises to obtain more formal financing;charitable donations by enterprises with political connections have a more significant positive effect on obtaining formal financing.Charitable donations have a greater role in promoting the formal financing of enterprises in areas with a low degree of financial marketization.The charitable donation behavior of small and micro enterprises can improve the level of corporate reputation,and corporate reputation plays a partial intermediary role between charitable donations and formal financing.In addition,this paper further uses the instrumental variable method to introduce the number of religious temples into the regression model for two-stage least squares regression,which alleviates the endogeneity problem in this paper.Based on the above conclusions and the mechanism of charitable donation,a more scientific understanding of the donation behavior of small and micro enterprises in China will provide important ideas for the government to develop corporate philanthropy.The administration ought to play a crucial part in resource allocation,establish a social credit system between government departments,banks and other formal financial institutions and small and micro firms,in order to ease the financing difficulties of small and micro enterprises caused by information asymmetry.For one thing,small and micro enterprises should correctly understand the strategic value of charitable donations for enterprises to obtain formal financing,and actively participate in charitable activities.For another thing,they should not excessively seek informal political operations to obtain resources."Hypocrisy" and speculation.At the same time,the government should avoid charitable "donation" behaviors caused by excessive use of administrative power.At the same time,relevant departments should supervise the rational use of relevant resources by enterprises,correctly guide the motives of enterprises for charitable donations,and prevent donations for bad purposes.Both enterprises and formal financial institutions should see the positive effect of charitable donations on the financing of enterprises and respond positively.