The Research on Financing Predicament and Effectiveness of Small and Medium-size Enterprises in China

Abstract

The primary purpose of the study is to explain the financing channels and effectiveness of Small and Medium-size Enterprises in China. China represents a good evaluation platform because it is one of the fastest growing emerging economies; China's economic growth depends on SMEs development. Lack of access to capital is the primary obstacle in developing vibrant SMEs in China. In order to solve the financing difficulty, commercial bank, venture capital and the local government has adopted various measures to support the development of SMEs. There are two main hypotheses posed by the study. The first one is there are pronounce liquidity gaps in the SMEs in China. The second is existing assistance programs are not effective in closing the liquidity gap in the SMEs in China. Index Terms - small and medium-size enterprises, financing predicament, financing channel, financing effectiveness