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Venture capital certification of small and medium‐sized enterprises towards banks: evidence from China

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  • Long Wu
  • Lei Xu

Abstract

Through a proprietary dataset of small and medium‐sized enterprises (SMEs) on China's National Equities Exchange and Quotations (NEEQ), we examine the impact of venture capital (VC) backup on access to bank loans by SMEs. We find that VC backup can help SMEs obtain more bank loans under better conditions and significantly relieve their financing constraint. This is especially meaningful for private SMEs, 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.

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  • Long Wu & Lei Xu, 2020. "Venture capital certification of small and medium‐sized enterprises towards banks: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(2), pages 1601-1633, June.
    • Handle: RePEc:bla:acctfi:v:60:y:2020:i:2:p:1601-1633
    DOI: 10.1111/acfi.12489
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