Title: Impact of the Global Crisis on SME Internal vs. External Financing in China,
Abstract: Changes in the capital structure before and after the global financial crisis
for SMEs are studied, emphasizing their financing problems, distinguishing
between internal financing and external financing determinants. The empirical
research bears upon 158 small and medium-sized firms listed on Shenzhen and
Shanghai Stock Exchanges in China over the period of 2004-2014. A regression
analysis, along the lines of the Trade-Off Theory, shows that the leverage
decreases with profitability, non-debt tax shields and the liquidity, and
increases with firm size and tangibility. A positive relationship is found
between firm growth and debt ratio, though not highly significantly. It is
shown that the SMEs with high growth rates are those which will more easily
obtain external financing after a financial crisis. It is recognized that the
China government should reconsider SMEs taxation laws.