A Research On The Relationship Between SMEs' Leverage Ratio And Risk-taking

Thispaper use monetary policy and the economic cycle as a starting point to study the relationship between the leverage of the SME and the risk taking of the enterprisesin China.The study sample is the annual financial data of the listed enterprises on the SME board and the GEM board of Shenzhen Stock Exchange from 2005-2014.First of all,with the monetary policy as the pointcut,this article studies the impact of the leverage of the enterprises on the risk taking of the SME: Weanalysis the impact of the leverage of the enterprises on the level of risk taking of the enterprises,the impact of the monetary policy on the risk taking of the enterprises,the impact of the interaction of the leverage of the enterprises and the monetary policy on the risk taking of the enterprises.The study found that there is a positive correlation between the leverage of the enterprises and the level of risk taking of the enterprises;the monetary policy will generate the asymmetric effect for the level of risk taking of the enterprises.The tight monetary policy will improve the risk taking of the enterprises,the easy monetary policy will reduce the risk taking of the enterprises.Compared with the easy monetary policy,the impact of the tight monetary policy on the risk taking of the enterprises is larger.The monetary policy may create the asymmetric effect on the risk taking of the enterprises by the leverage.There is a positive correlation between the interaction of the tight monetary policy and the leverage and the risk taking of the enterprises.There is a negative correlation between the interaction of the easy monetary policy and the leverage and the risk taking of the enterprises of which the impact on the one-year lending rate is the most significant.Secondly,on the base of the above stated research,this article adds the factors of economic cycle for further analysis: first we study the impact of the economic cycle on the risk taking of the enterprises,the impact of the interaction of the leverage of the enterprises and the economic cycle on the risk taking of the enterprises;then we study the impact of the interaction of the leverage of the enterprises,the monetary policy and the economic cycle on the risk taking of the enterprises.The study found that the economic cycle creates the asymmetric effect on the risk taking of the enterprises,the economic contraction period will improve the risk taking of the enterprises,the economic expansion period will reduce the risk taking,and the impact of the expansion period is larger than the impact of the contraction period;the economic cycle cannot create the impact on the risk taking of the enterprises by the effect of the leverage of the enterprises,at different stages of the economic cycle,the effect of the impact of the multiplying of the currency control and the leverage of the enterprises on the risk taking of the enterprises is different,when the policy instrument is one-year lending rate,if the enterprise is at the contraction period of the economic cycle,both the tight monetary policy and the easy monetary policy will improve the risk taking of the enterprises,if the enterprise is at the expansion period of the economic cycle,the tight monetary policy will reduce the risk taking,the easy monetary policy will improve the risk taking.Lastly,we get the related policy implications: the SME should have a full awareness of leverage risk for the adequate increase of the proportion of equity financing;the central bank should pay attention to the impact of the one-year loan interest rate adjustment on the risk taking of the SME for the making of the monetary policy;the enterprises should consider the issue of risk taking from the two aspects of micro and macro for the decision of production and the strategy of management and always pay attention to the government policy developments and understand the profound connotation.