The Research On Financing Model And Enterprise Innovation Based On Network Finance

Currently, China’s economic development pattern has gradually shifted from element-driven to innovation-driven. Generally, small and medium-sized enterprises are the principal part of innovation, while capital is one of the most decisive inputs of innovation activities. However, due to the insufficiency of own funds, lack of collateral and weak anti-risk ability, the problem of information asymmetry between the small and medium enterprises and financial institutions becomes serious, adequate innovation funds of minor enterprises can not be satisfied by the traditional mode of financing (commercial banks and the capital markets), which turns worse coupled with China’s imperfect financial system and rigid regulatory policy.In recent years, network finance prospers, representative of the third party payment, P2P (peer to peer) platform and crowdfunding, providing a new track for solving the financing problem of small and medium enterprises. As a reasonable and effective financing mode would offer financing channels, for enterprises’ innovation, and improve the efficiency of their investment. Therefore, this paper makes a tentative study in order to bring the supporting role of financing mode to enterprises’ innovation into full play.The theoretical study is based on the existing research results at home and abroad, following the defining of the related concepts on the financing mode and enterprise innovation.Firstly, the theory of financial development is put into consideration. On one hand, the traditional financial institutions tend to financing for state-owned enterprises and institutions, owing to financial regulation, double track system of interest rate and the information asymmetry. While the innovation has its property of uncertainty and high risk, leading to the higher fund-raising cost of small and medium-sized enterprises under the mode of traditional financing, which reduces the intention of traditional financial institutions to finance enterprises’ innovation investment. Thus, the mode of network finance has gradually developed. On the other hand, as the Internet industry has been grafted with financial function, network finance, following the process of financial disintermediation, can generate financial innovation outside the financial system. Shahrokhi (2008) named it the third kind of financing mode, besides the traditional financial intermediaries and capital market.Secondly, on the basis of two-sided market theory, the large number of idle funds owed by the mass, not involved in the traditional mode of financing and lack of channel to invest, would be introduced into the bilateral platform. With the development of Internet technology, such as cloud computing, social networking and search engine, the network finance mode, relying on enormous data processing, provides free trading platform for both the capital demand side of small and medium sized enterprises and the capital supplier of vast number of investors. Taking advantage of its own strength in the process of dealing with information asymmetry, trimming transaction costs and providing high efficiency in resource allocation, the network finance is able to reduce the cost of financing of small and medium-sized enterprises, broaden their financing channels, and promote innovation.Following the principle of science, validity and implementation, the relationship between the traditional mode of financing and enterprise innovation is being studied on the basis of financial development. The four levels, namely macro finance, commercial bank, traditional capital market and venture capital, and three stages in enterprise innovation, i.e. investment, R&D and commercialization would be through canonical correlation analysis. Then, a general inspection of each variable in commercial bank, capital market and venture investment would be carried on. The result indicates that while commercial banks and traditional capital market still play an important role in promoting the innovation of enterprise due to their long-term development, the effect is not obvious. And little influence comes from venture investment.In addition, ranging from four dimensions of time, industry, nature of platform and area, the impact of equity crowdfunding on the enterprise financing is being researched. It is concluded that equity crowdfunding platform is a policy oriented platform, scientific and technological innovation oriented enterprises have easier access to financing, platform with different properties provides various financing channels for enterprises and the possibility of successful financing of small and medium sized enterprises is higher in more developed regions, such as Beijing Shanghai and Guangzhou. Eventually, it concludes that the likelihood of successful innovation of enterprises, raising fund in the equity financing platform, is greatly improved, based on descriptive empirical of Dajiatou equity crowfunding. While the amount of financing, transference of shares, leading capital will affect enterprises’ innovation, as well.To conclude, some policy suggestions would be put forward for the development of network finance pattern and enterprise innovation. Multi-level financing mode should be established to broaden the financing channels of small and medium-sized enterprise for innovation. The traditional financing mode and network financing mode should be integrated to achieve their benign interaction. The predicament of the small and medium-sized enterprise in the network finance should be payed attention and solved. Besides, the guidance, encouragement and supervision of network finance should be strengthened by government.