Study Of Financing Order And Influencing Factors Of Chinese SME

The development of enterprises needs capital. Financing has been core of modern business management decision. Financing characteristics and influencing factors of small and medium-sized enterprises, viewed as fresh activists of China's economy, have drawn wide attention from academic circles and business circles.The paper positively investigates issues of finance of SME connecting with the practice of China. Financing order is tested with theoretical analysis and empirical analysis, influencing factors revealed from endogenous and exogenous aspects.Based on pecking order theory of new capital structure, financing order of China's SME is analyzed theoretically, revealing principal influencing factors from endogenous and exogenous aspects. The article emphasizes on the analysis of exogenous factors, indicating that capital availability is determinant of financing order whereas "availability " is restrained by institutional element in which debt financing is difficult to obtain and equity financing is almost unavailable. Hence financing order of SME corresponds with basic framework of pecking order theory but also possesses the characteristic of passivity. It is evidenced with a questionnaire survey for a sample of enterprises around Y City in Zhejiang Province by means of analysis of variance (ANOVA) and ordered-logistic regression.It is proposed that vision should be broadened and dilemma of SME'financing order is resolved from three financial aspects:institution, market, instruments after research conclusions are summarized. Nowadays, we can innovate in financial instruments in view of the situation of limited small and medium financial institutions and low capacity of growth enterprise market (GEM). This study suggests the idea of convertible bonds with a view to the dilemma referred to above. Limitations and future research direction are concluded and analyzed finally.