Impact of Financing on Investment in Chinese SMEs During Financial Crisis

Jiang Mingte and Bhabani Shankar Nayak ()
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Jiang Mingte: University of Glasgow
Bhabani Shankar Nayak: University for the Creative Arts

Chapter Chapter 4 in China: The Great Transition, 2023, pp 61-86 from Springer

Abstract: Abstract Small and medium-sized enterprises’ financing and investment issues have always been crucial in the economic growth and development. This chapter aims to examine the investment and financing decisions of SMEs in China between 2005 and 2015. Therefore, this chapter selected 4868 companies as samples from the CSMAR database for the study. In order to study the changes in investment of SMEs in China during the crisis and the impact of different financing channels (internal financing and external financing) on their investment, this study establishes two specific models to test these two hypotheses. The research shows that the financial crisis reduces investment in SMEs in China. At the same time, the investment decision of Chinese SMEs relies more on external finance (bank loans) than internal finance during the crisis. Finally, based on the data results, this chapter proposes some policy optimization suggestions for government and financial institutions like banks, which can help Chinese SMEs better cope with potential future crises.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-99-0051-0_4

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DOI: 10.1007/978-981-99-0051-0_4

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