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Access to Credit and Investment Decisions of Small and Medium-Sized Enterprises in China: Size Matters

Author

Listed:
  • Regis, Paulo José

    (Division of Economics, Xi'an Jiaotong-Liverpool University)

Abstract
Financial constraints are common in developing countries where financial systems are underdeveloped. In China, firms report that access to finance is the most important obstacle in the business environment. This is related to firms that fail to gain access to the credit market. We examine the likelihood of gaining access to credit by firms, and find that size and exporting appear to be the key characteristics. Credit constraints are significant for investment decisions. Together with size, access to credit is among the firm characteristics with the greatest impact on the likelihood to invest.

Suggested Citation

  • Regis, Paulo José, 2015. "Access to Credit and Investment Decisions of Small and Medium-Sized Enterprises in China: Size Matters," RIEI Working Papers 2015-01, Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration, revised 14 Jun 2016.
    • Handle: RePEc:xjt:rieiwp:2015-01
    as

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    File URL: http://58.210.89.21/RePEc/xjt/working-papers/RIEI-WP_2015-01.pdf
    File Function: Revised version, 2016
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    access to finance; investment decision; small and medium-sized enterprises; China;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets

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