Abstract:
There are many factors that affect SMEs’ ability to borrow from bank. Based on facts
and data about SMEs’ financing in Chengdu city, capital of Southwestern China’s Sichuan
province, this paper is intended to investigate the factors affecting SMEs to borrow from bank
by methods of empirical study. We find that whether SMEs can provide collateral or
guarantee is a decisive factor, factors such as firm size, willingness to accept bank’s clauses,
close relationship with bank play an important role. But in contrast to intuition, correlation
analysis and regression result shows that SMEs’ financial variables such as income, net profit,
asset-debt ratio and credit score is not obvious to affect their ability to get bank loan.
Consistent with theory prediction and qualitative analysis, firm size is the most important
factor to affect SMEs’ ability to borrow from bank. The regression results reflect information
asymmetry between SMEs and banks, and that banks had taken a simple way to protect
themselves.
