 The role of venture capital in SME loans in ChinaLong Wu and Lei Xu Research in International Business and Finance, 2020, vol. 51, issue C Abstract: We examine the role of venture capital (VC) in small and medium-sized enterprise (SME) loans through samples on the National Equities Exchange and Quotations (NEEQ) in China. We find that VC backup can effectively improve SMEs’ access to bank loans, especially short-term loans, at lower costs, and loans without collateral. VC backed loans are also less likely to default and positively related to SMEs’ performance. Our findings further suggest that VC backup reduces the information asymmetry between banks and SMEs through both “hard” information of better-quality financial statement and “soft” information of SMEs’ creditability. Evidenced by enhanced SME financing conditions and bank efficiency in loan allocation, the combined debt-equity financing scheme can be a meaningful new ingredient in the financial infrastructure of the largest emerging market. Keywords: Venture capital; Small and medium-sized enterprises; Debt-equity financing; Bank loans; China (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:51:y:2020:i:c:s0275531919303691 DOI: 10.1016/j.ribaf.2019.101081 Access Statistics for this article Research in International Business and Finance is currently edited by T. Lagoarde Segot More articles in Research in International Business and Finance from Elsevier |
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