Can China’s Shadow Banking Ease The Financing Constraints Of SMEs?

Difficult financing and expensive financing have always been an important factor restricting the development of SMEs.In recent years,China’s shadow banking has experienced a blowout development.Due to its innovative financing methods,it has largely met the financing needs of SMEs and alleviated their financing constraints.Based on summarizing the development status of China’s shadow banking and the financing dilemma of SMEs,this paper analyzes the mechanism of shadow banking to alleviate financing constraints on enterprises.This paper uses the data of listed companies in SMEs between 2010 and 2018 as the research sample,based on the investment-cash flow sensitivity model.It studies the impact of shadow banking development on alleviating SMEs financing constraints in China’s unique financial system environment.the empirical research shows that:(1)The investment expenditure of SMEs in China is highly sensitive to cash flow,indicating that this group has significant financing constraints;(2)The development of shadow banks provides short-term funds to the SMEs,and strengthens the capital liquidity,significantly eases the financing constraints of SMEs;(3)Compared with the period of monetary policy easing,shadow banking has a more obvious effect on the financing constraints of SMEs during the period of monetary policy tightening.The policy suggestions put forward in this paper are: The development of shadow banking should be regulated rather than restricted when implementing the financial regulation policy of strong supervision and risk prevention.Through the establishment and improvement of laws and regulations,improve the regulatory mechanism to promote the healthy development of shadow banking;Establishing special financing institutions for SMEs to alleviate financing constraints.