SMEs Protection,Financing Constraints And Corporate Risk Taking

In the whole process of business growth,an enterprise cannot survive for a long time if it cannot withstand various risks.The level of risk taking reflects the overall risk preference in the process of investment and decision-making.Low risk project selection can bring lower but more stable income for the enterprise main body;The selection of high-risk projects requires a lot of uncertainties,but it also means that the business owners will get higher investment returns,and in the process of wealth accumulation and expansion,better value will be created for shareholders and the enterprise itself.In addition,as the largest market entity in China,smes are characterized by large number,low market recognition,financing difficulties and other characteristics,and relatively weak market competitiveness.However,smes play a vital role in promoting reform,preventing risks,increasing employment and benefiting people’s lives.It is of great practical significance to study the influence of rule of law policy adjustment on smes’ risk-taking behavior.Therefore,this paper focuses on the implementation of the latest revision of the Law on the Promotion of Small and Medium-sized Enterprises,and studies whether it affects the level of risk taking of small and medium-sized enterprises and the intermediary channels for realizing such impact.The Law on the Promotion of Small and Medium-sized Enterprises(smes)is the first law specifically designed to encourage,support and guide the development of smes.Since it was formulated and promulgated on January 1,2003,it has played an extremely crucial role in improving the business environment of smes,promoting their healthy development,and expanding urban and rural employment.The rule of law is an important part of the business environment.In order to further strengthen the protection of small and medium-sized enterprises,optimize the financing environment,provide support for entrepreneurship,and inject "fresh water" into the development of small and medium-sized enterprises,China revised the Law on the Promotion of Small and Medium-sized Enterprises,which came into effect on January 1,2018.On the one hand,the revision clarified the functions and powers of the government.It has increased the government’s fiscal and tax support and market supervision for smes,alleviating the problem of information asymmetry of smes.On the other hand,the revision has also expanded the range and types of collateral available for smes in financing,and improved the financing environment of smes,so as to help smes ease financing constraints and better resist and defuse risks.In this study,relevant data of A-share listed companies in Shanghai and Shenzhen from 2012 to 2021 are used to construct A differential model based on the quasi-natural experiment of the revision and implementation of the Law on the Promotion of Small and Medium-sized Enterprises.The results show that: The revision of the Law on the Promotion of Small and Medium-sized Enterprises has a significant promoting effect on the improvement of the level of risk taking of small and medium-sized enterprises.Meanwhile,this paper verifies that financing constraints and managers’ confidence play an intermediary role in the impact of the revision of the Law on the Promotion of Small and Medium-sized enterprises on the level of risk taking of small and medium-sized enterprises,and the intermediary effect of financing constraints is more significant.Further research results show that there are significant differences in the implementation effects of legal policies in different regions under different legalized business environments.Smes in regions with poor legalized business environment are more sensitive to such favorable policies than those in regions with better legalized business environment,and the improvement in the level of risk taking of small enterprises is significantly higher than that in regions with better legalized business environment.Finally,based on the research results of this paper,some suggestions are provided for enterprise managers,law makers and relevant government departments.