Research On The Effect Of Small And Medium-sized Enterprises Owners’ Characteristics On Informal Financing Behavior

As an important part of national economy, small and medium-sized enterprises (SMEs) can create enormous wealth to the society, provide a large number of employment opportunities, enhance the economic vitality and speed up the transformation of economic structure. However, SMEs are generally faced with the financing difficulty during their growth, which is mainly due to the instability of operation, low transparency of finance, and lack of collaterals. SMEs’huge demand for capital stimulates the rapid development of informal finance, which currently plays a more and more crucial role in relieving SMEs’financing difficulty. But the high interest rate of informal finance easily triggers default risk, and in recent years, some SMEs in Wenzhou and Ordos rely heavily on informal finance, and once their capital chain breaks down, informal financial crisis is triggered, and this has drawn extensive attention of the whole society.Against this background, this paper mainly researches on the SMEs and informal finance. But different from previous researches, considering that the organization structure of SMEs is usually quite simple and SME owners have large effects on various decisions about the enterprises, this paper mainly researches on the effects of SME owners’personal characteristics on the enterprises’ informal financing behavior and discusses that SME owners with what kind of characteristics would be inclined to adopt informal finance.This paper consists of six parts. The first part mainly introduces the research background and significance, summarizes the previous research results on informal finance, SME financing and business owners’personal characteristics, and clarifies the research goal and method as well as the innovation and deficiency of this paper. The second part mainly introduces the definition, organization type and status quo of informal finance, and the definition, feature and status quo of SMEs, which is a preparation for the following theoretical analysis and empirical test. In the third part, SME owners’ personal characteristics are divided into four aspects, and several assumptions are proposed based on theoretical analysis and existing researches. The fourth part elaborates on the data source and research model. Then an empirical test is conducted in the fifth part to prove the above research hypothesis. It is proved that SME owners with lower education degree, lower political relation, more social interaction investments, and stronger preference for control would be more willing to adopt informal finance. Lastly, the sixth part concludes the effects of SME owners’ personal characteristics on informal financing behavior and proposes several suggestions, including comprehensively improving the personal quality of SME owners, encouraging SMEs to build good social network and optimizing SMEs’ external financing environment, etc.