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Venture capital certification of small and medium‐sized enterprises towards banks: evidence from China
Author(s) -
Wu Long,
Xu Lei
Publication year - 2020
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12489
Subject(s) - business , venture capital , backup , china , finance , equity (law) , context (archaeology) , debt , certification , chinese financial system , financial system , small and medium sized enterprises , economics , mechanical engineering , paleontology , management , political science , law , biology , engineering
Through a proprietary dataset of small and medium‐sized enterprises ( SME s) on China's National Equities Exchange and Quotations ( NEEQ ), we examine the impact of venture capital ( VC ) backup on access to bank loans by SME s. We find that VC backup can help SME s obtain more bank loans under better conditions and significantly relieve their financing constraint. This is especially meaningful for private SME s, those in high‐tech, in regions of less‐developed banking industry, or with lower quality accounting information. This study may have policy implications as a pilot ‘combined debt‐equity financing’ discussion in the context of the largest bank‐based economy.