Small And Medium-Sized Banks Development And Smes’Financing Constraints

At a certain stage of development of the economies, the optimal financial structure is endogenously determined at the optimal industrial structure, and the optimal industrial structure depends endogenously on the factor endowment structure during that phase. Although factor endowment structure determines that the small and medium-sized enterprises (SMEs) are main type of business in China’s current optimal industrial structure, and SMEs financing constraints has become a consensus. According to the optimal financial structure theory of the new structure economics, small and medium-sized banks (SMBs), which could well adapt to meeting financing demand of SMEs, have developed so slow that SMEs’financing constraints have not been eased and China’s financial structure has deviated from the optimal path. However, China’s empirical evidences that the development of SMBs relieves SMEs’ financing constraints are insufficient. Therefore, to further identify the relationship between SMBs’development and SMEs’financing constraint has important academic value and practical significance.From the theoretical perspective of the optimal financial structure theory of the new structure economics, after a detailed analysis about the comparative advantage effects of SMBs relieve financing constraints of SMEs, based on the investment model of Euler equation, this paper systematically investigates whether the development of SMBs is important for easing financing constraints of SMEs through interactively controlling another three influence factors which are the relative proportion of bank intermediary and financial market, financial development level and interest rate floating. To ensure the robustness of the results of the study, this paper rebuilds the empirical model by relaxing the assumption of the model to further test the robustness of empirical results.Applying the data of listed companies from SME board from2006to2011, and the first-order difference GMM estimation method, this paper finds that SMEs’ financing constraints problems exist significantly and the development of SMBs significantly reduces the sensitivity of investment to cash flow, effectively relieves financing constraints of SMEs. Robustness test shows that the factor leading sensitivity of investment to cash flow is financing constraints rather than agency conflict, and the relative proportion of banking intermediation and financial markets, financial development and the loan interest rate floating still are unimportant for easing financing constraints of SMEs. The policy implication of this paper is that, compared with promoting financial development of the total level and relaxing rate control, financial structure reform with SMBs developing as the core content should occupy the priority in financial reform agenda.