Medium-sized Enterprise Financing Research Articles

Research on the Coordinated Development of Inclusive Finance and Financing for Small and Medium-sized Enterprises

As an important force in promoting economic and social development, small and medium-sized enterprises play a crucial role in enhancing China’s economic strength, creating employment opportunities, and promoting industrial structural transformation. However, due to their inherent weaknesses, small and medium-sized enterprises often face difficulties in financing within the traditional financial service system. This makes it difficult for small and medium-sized enterprises to inject vitality into the development of the market economy by expanding their financing scale. Since 2013, China has vigorously developed inclusive finance and extended the services of traditional financial institutions to small and medium-sized enterprises, providing policy guidance, resource support, and technical support to alleviate the financing difficulties of small and medium-sized enterprises. Based on this, this article focuses on the current financing problems faced by small and medium-sized enterprises and specifically elaborates on how to lower the financing threshold for small and medium-sized enterprises and broaden their financing channels through inclusive finance, in order to promote the development of inclusive finance and a virtuous cycle of financing for small and medium-sized enterprises.

The Role of Capital Markets for Small and Medium-Sized Enterprise (SME) Finance

SMEs play a crucial role for inclusive development, but their growth is often hampered by lacking access to finance. This paper explores whether capital markets can be harnessed to foster SME finance. Given the negligible use of market-based financing by SMEs, it is analysed to what extent capital market development indirectly alleviates SMEs’ financing constraints by improving their access to loans. Thus, the study builds on the theoretical model by Song and Thakor (2010), which consolidated the view that markets and banks are complementary and co-evolve. Using a modification of the analysis framework by Rajan and Zingales (1998) for 68,712 firm-level observations from 50 mostly low- and middle-income countries for 2006-2019, it empirically investigates the central prediction of Song and Thakor (2010) that capital market development is associated with an increase in bank lending, in particular, towards smaller and riskier firms. I find a positive and significant effect; in support of Song and Thakor (2010), the effect runs through increased capital market usage by financial institutions and expanded loan availability. The findings underline that markets and banks co-evolve and that the most important contribution of capital markets to SME finance is their indirect effect on bank lending and loan availability.

Equity Financing Potential for Leading R&D of Small and Medium-Sized Biomedical Corporations

From the perspective of small and medium-sized innovative biomedical enterprises, this study conducts a comprehensive analysis of the corporate financing capacity during the equity financing process, aiming to provide valuable insights for the successful implementation of equity financing. The study involved the distribution of a total of 400 questionnaires to Chinese venture capital institutions and SMEs of innovative drug R&D, followed by statistical analysis of the questionnaire data results. In light of the challenges faced by these enterprises during the equity financing process, such as inadequate attention to financing business plans, neglect of financing roadshows, insufficient financing expertise, reliance on single financing approaches or channels, lack of meticulous capital partner selection and enterprises raise capital prematurely, this study proposes several countermeasures. These include prioritizing the financing business plan, emphasizing the importance of the financing roadshows, adopting a diversified financing approach, and objectively determining the optimal entry point for the financing stage. Venture capital can effectively address the financing bottleneck faced by small and medium-sized innovative biomedical enterprises, thereby serving as the optimal financing channel. Not only that, but also can effectively address the bottleneck issues associated with equity financing for small and medium-sized innovative biomedical enterprises and play a pivotal role in the field of innovative drug research and development (R&D). By fostering the development of more efficient novel drugs, it can significantly contribute to the robust growth of China's biomedical industry.

Financing of new SMEs in Latvia – opportunities and obstacles

The relevance of the study is related to the fact that the predominant factor for the development of economic activity for newly established enterprises is the possibility of business financing. However, despite the availability of alternative sources of financing for new small and medium-sized enterprises (SMEs), there are various obstacles to obtaining them. The aim of the study is to analyse the opportunities for raising finance from various financial sources and the related obstacles for new SMEs in Latvia. The study used quantitative and qualitative methods of analysis, a survey of SME entrepreneurs, structured interviews with experts, data processing methods and the method of analysis and synthesis. This paper determines for what purpose and what financial sources entrepreneurs will use if necessary, as well as what obstacles exist to obtaining financing. The results of this study may be beneficial for both financial organizations that finance companies and new SMEs in the financial decision-making process.

The Role of Direct Credit Facilities in Financing Small and Medium Enterprises in Jordan Case Study (Islamic International Arab Bank)

Objectives: The study aimed to identify the role of Islamic banks operating in Jordan (Islamic International Arab Bank) in providing appropriate financing for small and medium-sized enterprises, and on the effectiveness of the financing methods adopted in the Jordanian Islamic banks to finance small and medium-sized projects, and on the most important obstacles and difficulties facing Islamic banks (Islamic International Arab Bank) when providing appropriate financing to small and medium-sized enterprises. Methods: The study relied on the descriptive approach in order to describe and explain the role of Islamic banks in financing small and medium enterprises and to identify the most important obstacles faced by Islamic banks. Results: The study concluded that there is a role for Islamic banks in financing small and medium enterprises, which is a strong relationship, since the correlation coefficient is 99.8, and there is an effectiveness of Islamic financing formulas in financing small and medium enterprises. There are some obstacles that Islamic banks (International Arab Islamic Bank) face when providing financing to small and medium enterprises. Conclusion: The study recommended the need for the competent authorities such as the Central Bank to work to provide the elements of success for Islamic banks because of their important role in providing financing for small and medium enterprises. And that Islamic banks should provide feasibility studies for the projects that provide financing to them.

Entrepreneurial financing: how global and regional export intentions affect financial and non-financial choices for small and midsized enterprises in low-income countries

PurposeThe study explores how the intention to export affects financing and non-financing variables for small and medium-sized enterprises (SMEs) in a low-income country (LIC). The objectives of this study are (1) to discern between regional and global exporting and (2) to evaluate its policymaking implications.Design/methodology/approachPrimary survey data were collected from 330 Rwandan SMEs and were analysed using ordered logistic models as an application of the expectation-maximisation iterating algorithm, which was tested for robustness using a sampling model variation.FindingsThe results show that alternative sources of finance are the predominant choice to finance the intention to export within and outside Africa. As the scope of export intentions broadened from regional to global, there was a shift in preferences from less formal to more formal lending technologies, moving from methods like factoring to lines of credit. Moreover, reliance on bank officers became more significant, with increasing marginal effects. Finally, the study determined that government financing schemes were not relevant for SMEs pursuing either regional or global exporting.Practical implicationsWhilst alternative sources of finance predominate the export intentions of Rwandan SMEs, establishing a robust banking relationship becomes crucial for global exporting. Despite this implication, the intention to export should prompt more transparent communication regarding government financial support programmes. There is an opportunity for increased usage of relationship lending to customise support for SMEs involved in exporting, benefiting both the private and public sectors.Originality/valueThis study accentuates how export distance alters SME financing priorities. The results also contribute to understanding how the value of relationship lending changes when less familiar markets (i.e. global exporting) are the objective. Moreover, the study offers a new perspective on how institutional voids affect entrepreneurial financing decisions in LICs.

Risk Analysis and Supervision of P2P Online Lending

In the new era of rapid development of science and technology, the combination of finance and technology has brought new financial cognition to people, but the emergence of financial technology has also brought great challenges to risk management in the financial field. With the development and maturity of Internet technology, the rapid innovation of Internet finance has promoted the prosperity of online lending, well met the financing needs of various entities in the market, and effectively solved the problem of expensive financing for small and medium-sized enterprises and private enterprises. However, the rapid development of Internet finance has also spawned a wider range of financial risks and updated forms. Taking P2P online lending as an example, this paper analyzes the causes and effects of the rise of P2P online lending, finds that there is asymmetric leverage effect in the fluctuations of P2P online lending, analyzes the risks, existing problems and causes of final failure of P2P online lending, and explores the development model of online lending in the post-P2P era and the construction of big data risk control system. Finally, some practical suggestions and countermeasures are given.

Regional cooperative banks, ecosystems and small and medium-sized enterprise financing: the importance of cognitive, social and geographic proximities

PurposeThis study analyzes the role of regional cooperative banks in identifying and financing small and medium-sized enterprises (SMEs) from a proximity perspective. Access to finance is a major challenge for SMEs. Regional cooperative banks can remove this barrier based on cooperative bank's characteristics and geographic proximity to SMEs. Understanding the interplay between these financial actors and firms can contribute to a better support of SMEs development.Design/methodology/approachThe results are based on a case study of eight SMEs located in southwestern France. Interviews were conducted with two regional cooperative funds and eight SMEs. The interview guide included questions related to the company, the projects financed and how financing was accessed.FindingsResults reveal that a combination of three forms of proximity allows regional cooperative banks and SMEs to establish effective financing operations. They show that regional cooperative banks are key players in the existing financing mechanisms for SMEs. Such financing is often used to gain access to larger players at a later stage. The findings suggest the need for public policies that promote the integration of financing actors in regional ecosystems to advance SMEs' development.Originality/valueThis article examines how SMEs access financing, with a focus on regional cooperative banks, which have received little attention in the literature. Moreover, the relationships between these actors are studied through the lens of proximity. Regional cooperative banks are able to finance projects that may have been overlooked by traditional banks due to trust-building local dynamics.

Research on the Evolution Path of Supply Chain Financing for Small and Medium-sized Enterprises

Information asymmetry is the main reason why it is difficult and expensive for small and medium-sized enterprises to obtain financing. This paper uses the system dynamics method to construct an evolution model of the supply chain financing system of small and medium-sized enterprises, simulates the dynamic changes of the financing amount of the supply chain financing system of small and medium-sized enterprises, and explores the relationship between various influencing factors and their effects on the financing amount. The research shows that the supply chain financing of SMEs is a complex and dynamic system, and the overall financing amount has a significant cumulative effect, and is more sensitive to the solvency of SMEs, the relationship between core enterprises and financial institutions, government support, and the degree of supply chain information sharing. In order to alleviate the financing difficulties of small and medium-sized enterprises, the government should increase support for the supply chain financing of small and medium-sized enterprises, banks and other financial institutions should strengthen the supply chain financing service capabilities of small and medium-sized enterprises, small and medium-sized enterprises should pay attention to the improvement and upgrading of internal management, and the main body of the supply chain should strengthen cooperation and communication.

Digital inclusive finance and corporate environmental performance: Insights from Chinese micro, small- and medium-sized manufacturing enterprises

Extensive research has discussed digital inclusive finance’s (DIF) rapid growth in financial services and its vital economic role; however, limited research addresses its potential to mitigate micro, small- and medium-sized enterprise (MSME) financing constraints and generate environmental benefits. This study empirically investigates the effects of DIF on Chinese MSMEs’ environmental performance using a substantial manufacturer sample. The findings indicate that DIF significantly reduces the wastewater discharge intensity of MSMEs. Furthermore, DIF has a more pronounced environmental effect on non-state-owned firms, SMEs, firms in areas with more significant emission reduction pressure, and those in the eastern region. Further mechanism analysis reveals that DIF can ease the financing constraints of MSMEs. Moreover, strengthening terminal treatment, optimizing the energy consumption structure, and increasing investment in research and development are significant pathways through which DIF affects corporate environmental performance. Finally, this study proposes some policy implications to promote the green transformation of MSMEs.

Empirical Study on Financing Constraints of Small and Micro Enterprises in Taizhou

The development of regional and private economies has been hindered by the persistent challenges faced by small and micro companies in securing financing. This study develops an empirical framework to examine financing limitations and conducts a comparative analysis on the financing constraints faced by small and micro firms in Taizhou. The analysis is based on a dataset specifically collected for small and medium-sized enterprise financing. Research indicates that capital structure factors have an impact on the investments of both medium-sized enterprises and micro, small, and medium enterprises (MSMEs). However, MSMEs tend to face more severe limitations in accessing financing compared to medium-sized enterprises. Additionally, the presence of assets that can be used as collateral is found to significantly influence the level of indebtedness for MSMEs, whereas its effect on medium-sized enterprises is less pronounced. The article presents a range of countermeasure proposals aimed at addressing the financing challenges faced by MSMEs. These proposals encompass several key areas, including the establishment of a policy support system that promotes collaboration across multiple sectors, the provision of differentiated credit support, the restructuring of the financing credit guarantee system, and the advancement of digital inclusive finance to enhance the precision of financial services for MSMEs.

Classic and alternative sources of capital in the small and medium-sized enterprise sector in Polish conditions

Purpose of the study: The main purpose of this article is to present selected classic and alternative sources of financing for small and medium-sized enterprises in Polish conditions. The article also aims to present the advantages and disadvantages of each source of capital.
 Methodology: The article was prepared using the method of a critical review of the literature on the formation of the capital structure of enterprises and the choice of sources of financing the activities of the SME sector. The literature review conducted analyzed articles and other publications related to the topic.
 Main findings: The presentation of selected sources of business financing, along with the advantages and disadvantages of using them, shows the multiplicity of choices available to managers, but at the same time warns against their improper use.
 Application of the study: The analysis presented here makes it possible to systematize knowledge in the area of theory related to classical and alternative sources of business financing. The theoretical content is expanded to include an objective presentation of the advantages and disadvantages of using different ways of financing business activities. The research can help you decide on the appropriate source of business financing, mainly at the initial stage.
 Originality/Novelty of the study: The study undertaken reveals space for further analysis of available sources of business financing, especially for large and advanced stage enterprises.

Analysis and Countermeasures to Alleviate the Financing Constraints of Small and Medium-Sized Enterprises

Purpose - Small and medium-sized enterprises are an important component of China’s national economy, but their financing channels are constrained by many factors. With the rapid development of financial technology, they have shown enormous potential in the field of financing for small and medium-sized enterprises. This study aims to analyze how fintech can alleviate financing constraints faced by small and medium-sized enterprises, and propose corresponding countermeasures. Through analysis and research, it has been found that financial technology has effectively expanded the financing channels of small and medium-sized enterprises by improving the accessibility of financial services, reducing transaction costs, and improving risk management capabilities. However, technical risks, regulatory uncertainty, and the financial transparency of the enterprise itself remain the main factors that constrain its development. To this end, constructive countermeasures and suggestions are proposed
 Design/Methodology/Approach - Based on the technical basis of fintech, this paper studies the problem of fintech alleviating the financing constraints of small and medium-sized enterprises.
 Findings - This paper studies mainly analyzes the mechanism of fintech alleviating financing constraints.
 Research Implications - Suggest strengthening the construction of financial technology regulatory framework, improving the internal financial management level of small and medium-sized enterprises, and promoting the coordinated development of financial technology and traditional financial institutions, in order to further release the positive role of financial technology in alleviating financing constraints for small and medium-sized enterprises.

The NewConnect market as a source of raising funds for the SMEs

Motivation: The NweConnect market is intended for small, innovative and dynamically developing companies, especially in the so-called new economy. A debut on this market is one of the possible strategies for raising capital by a small and medium-sized entrepreneur. In times of economic downturn and limited supply of capital on the capital market, only the most credible have a chance to raise capital on the alternative market.Aim: recognition of the actual nature of companies listed on the alternative market in Poland, with particular emphasis on the voivodeships of Eastern Poland. It was assumed that mainly young, innovative and fast-growing companies are listed on the NewConnect market. The analysis was based on a review of domestic and foreign literature and on the estimated linear econometric model.Results: Most companies on the NewConnect market are not characterized by rapid development, short period of entering the market and a high level of innovation. There are also companies from industries where the level of innovation was not a key element of activity from the beginning. In addition, the changes that have taken place (i.e. from market entry to the current situation, 2007–2022) are not favourable. While at the beginning of their activity (since 2007) listed companies were characterized by a relatively high level of innovation, now (2022) this level is decreasing. This justifies the need for further research on the development of the NewConnect market as a source of financing for small and medium-sized enterprises.

Digitalization, financial inclusion, and small and medium-sized enterprise financing: Evidence from China

This study investigates the impact of a new digitalization policy implemented in seven pilot zones in China on small and medium-sized enterprises (SMEs) and their access to finance. Given the limited evidence on how digitalization promotes financial inclusion, we employ a quasi-natural experiment approach to assess its effects. Our findings demonstrate that digitalization is more effective than traditional approaches in alleviating SMEs' financing constraints and enhancing financial inclusion. Specifically, the utilization of digital financial services, such as payment, money funds, credit, insurance, and investment, plays a crucial role in mitigating information asymmetry and facilitating SMEs' access to finance. These results provide support for the ongoing digital transformation of SMEs and financial institutions, emphasizing the significance of information-bearing through digital channels.

Bank Credit and Trade Credit: The Case of Portuguese SMEs from 2010 to 2019

Small companies face significant difficulties in accessing finance, and the use of bank credit and trade credit are the primary sources of financing, specifically in small countries, with little market liquidity, and focused on the banking system, as is the case of Portugal. The main objective of this article is to identify significant drivers of bank and trade credit, as well as investigate the complementary or substitutive relationship between them, considering that both constitute an essential source of financing for small and medium-sized enterprises (SMEs). The sample comprises 5860 companies, and the analysis was performed using panel data methodology (2010–2019). The results suggest that, during the period in which the financial crisis was most felt in the country (2010–2013), companies intensified their demand for trade credit, and in the following years for bank credit. Our evidence does support the substitution hypothesis between trade and bank credit.

ANALISIS MEKANISME PEMBIAYAAN MIKRO KEPADA KELOMPOK UMKM

The objective of this research is to identify the mechanism of financing for micro, small, and medium-sized enterprises (MSME). The identification can help people distinguish financing mechanisms applied in Islamic and conventional banks based on the law of the contracts and the requirements made by the bank. Furthermore, MSME can choose easily which type of financing benefit them most. In brief, Islamic banks use Murabaha, while their counterparts use interest system. Hence, people can be more aware about banking in Indonesia especially in terms of the offered financing products.keyword: banking, the low of the contracts,system

Summary of Research on Order Financing Decision Optimization and Risk Management

To alleviate the pressure of financing for small and medium-sized enterprises in my country, order financing has become one of the effective ways to solve the financing difficulties of China's small and medium-sized enterprises. Order financing is a kind of supply chain financing mode. Compared with traditional accounts payable financing, order financing advances the financing link, accelerates the capital turnover efficiency, and better solves the urgent demand for funds of small and medium-sized enterprises. This paper reviews the research status of order financing from three aspects: order financing model evolution, decision optimization, and risk management. Through combing the existing literature, it puts forward appropriate policy recommendations for the order financing model under the current development status, which will provide direction for the development of order financing in the future.

Blockchain-Driven Optimal Strategies for Supply Chain Finance Based on a Tripartite Game Model

Applying blockchain to supply chain financing is an effective way to solve the problems of financing difficulties, high financing costs, and slow financing for small and medium-sized enterprises (SMZEs). Using evolutionary game theory, this study constructs a tripartite game model and analyzes the influence of blockchain technology on the evolutionary stability strategies for financial institutions (FIs), core enterprises (CEs), and SMZEs, in which the default losses of CEs and SMZEs are assumed to be dynamic. The results of this study are as follows: (1) When CEs and SMZESs’ default losses are lower than some critical value, they tend to break their promises. (2) When accounts receivable are greater than some critical value, CEs cannot repay on time because they can make a relatively large profits from delayed repayment, whereas SMZEs can be constrained to be trustworthy. Finally, the results using numerical simulation show that both relatively large default losses and enough large, trustworthy income sources can make CEs and SMZEs tend to keep their promises; in turn, CEs would be non-paying and the SMZEs tend to be trustworthy for relatively large accounts receivable. The results provide theoretical support for realizing healthy and sustainable development for supply chain finance.

The debt-equity choice in crowdfunding: a two-method approach

ABSTRACT Securities-based crowdfunding has evolved into an important source of financing for small and medium-sized enterprises (SME), but little is known about how crowdfunding campaigns fit into the capital structure decisions of SMEs. Combining insights from SME capital structure and crowdfunding literatures results in high ambiguity, as crowdfunding seems to change SME financing dynamics, but in an uncertain direction. We construct variables based on previous work on SME capital structure literature to empirically test which characteristics help explain the choice to seek either equity or debt funding among firms using crowdfunding. We use 713 equity and 403 debt campaign announcements registered with the U.S. Securities and Exchange Commission under Regulation Crowdfunding. Our empirical procedure includes both the traditionally used logistic regression method as well as a random forest classifier. We find that less-established firms with smaller funding needs are more likely to issue equity, whereas firms with strong growth momentum and larger funding needs prefer debt.