The Financing Constraints Of Small And Medium-sized Enterprises:A Banking Competition Perspective

In China,SMEs play an important role in promoting national economic development,which is the most extensive basis for the stable operation of our market.However the difficulty of financing for SMEs has always been the primary problem hindering their development,As a developing country,our financial market started too late,and the economic system is imperfect,the bank is still the main source of external financing for SMEs.Therefore,China's banking reform has begun to focus on easing the financing constraints faced by SMEs in recent years.How to adjust the banking structure in China to promote the development of SMEs has become a hot issue.At present,the academic research on SMEs' financing constraints is mainly focusing on its causes,influencing factors and the possible consequences.In this paper,from the perspective of banking competition,combined with the dual considerations of enterprises and banking industry,we not only analyzes the impact of case-related enterprise bank competition on corporate financing costs,but also further tests the relationship between changes in banking competition and financing constraints of SMEs through large sample data.Firstly,Rongji Software Company is selected as the case enterprise.Since listing,it has applied to the bank for credit line every year and maintained stable contact with the bank.Through the analysis of its financial report and company announcement from 2015 to 2017,this paper demonstrates the relationship between the loan relationship bank and the loan cost.It is found the source of borrowings has changed in the past three years,the amount of borrowing has been increasing,but the cost of borrowing has been declining,indicating that different types of banks have different lending policies for SMEs,and will reduce the cost of loans for SMEs because of competitive pressures.In order to get a more general conclusion,this paper further selects the listed companies on the SME board from 2012 to 2017 as the target sample for empirical testing,and uses the Cash-Cash flow sensitivity model to analyze the financing constraints of enterprises.The results show that the enterprises with financing constraints are more willing to reserve sufficient cash.Then we construct the banking competition index from the banking concentration(HHI)and the development of small and medium banks(MSB),and cross them with cash flow index to add the model to measure the impact of banking competition on cash-cash flow sensitivity of sample firms.Through regression analysis,it is found that sample firms show strong cash-cash flow sensitivity,indicating that SMEs in China do have strong financing constraints.After joining the banking concentration and cash flow crossover variable(HHI_Cf),the cross-term coefficient is significantly positive,which shows that banking monopoly will significantly increase the cash flow sensitivity of SMEs,that is,the more concentrated the banking industry,the greater the financing constraints faced by SMEs.After adding the small and medium bank development and cash flow crossover variable(MSB Cf),the cross-item coefficient is significantly negative,indicating that the development of small and medium banks will ease the financing constraints of SMEs.This paper uses the case and empirical analysis to demonstrate the hypothesis systematically and adequately.The results show that banking competition can alleviate the financing constraints of SMEs.Through multi-level research perspective and methods,it makes up for the lack of empirical data in the research on the relationship between banking market structure and SMEs financing constraints.And it also provides some policy suggestions for the reform of banking market structure and the development of SMEs from both macro and micro perspectives.