FACTORS INFLUENCING FINANCING OF CHINESE LISTED SMEs

Abstract

This study is aiming at analysis the influencing factors of SMEs debt financing. Using 651 listed SMEs in China, this paper separating 4 factors influencing SMEs external financing and 3 factors influencing SMEs internal financing respectively, finds that profitability, accumulation of funds, and solvency of SMEs have a positive correlation with internal financing and restrain the external debt financing of the SMEs. As for the factors influence corporate external financing, the enterprise characteristics and cash turnover ratio are positively related to SMEs debt financing, and enterprises’ current asset turnover ability inhibit their debt financing. However, there is no significant relationship between corporate growth capacity, asset mortgage level and debt financing, it may be due to the one-sidedness of the indicators selected in this paper. The hypotheses result suggesting that SMEs will obey the pecking order theory when financing, this also indicates that the external financing environment for SMEs is not optimistic in China.