Inclusive Small and Micro Credit Supply and Entry of Small and Micro Enterprises: Evidence from the Establishment of Small and Micro Banks
WANG Xianbin, XU Tingjun, YAN Xiangqi
School of Economics/ Center for Madhyamaka Economics Research, Jinan University; Institute of Public Finance and Banking, Guangdong Academy of Social Sciences
Summary:
In recent years, small and micro enterprises (SMEs) have faced sustained pressure on their production and operations due to multiple domestic and international factors, including reduced orders, intensifying competition, and rising costs. Inclusive finance, as a key institutional arrangement for promoting the development of the real economy and safeguarding the survival and growth of small and micro enterprises, has drawn considerable attention to its policy effectiveness. To alleviate the financing difficulties of SMEs, the Chinese government has introduced a series of policies centered on inclusive SME credit. Based on this, this paper constructs a panel dataset covering the period from 2009 to 2021 to examine the impact of inclusive micro and small business lending on the market entry behavior of these enterprises. It then proposes policy recommendations from an inclusive finance perspective to enhance the entrepreneurial vitality and operational resilience of micro and small businesses, providing empirical support for a comprehensive assessment of the effectiveness of inclusive micro and small business lending policies. First, this paper constructs a theoretical model of enterprise market entry incorporating financing constraints and costs, systematically analyzing the specific mechanisms through which the establishment of micro-enterprise branches influences SME market entry. Second, empirical tests using a staggered difference-in-difference (DID) method reveal that the establishment of small and micro branches (SMBs) significantly promotes SMEs market entry: counties or districts with SMBs exhibit a roughly 25.44% higher SMEs market entry rate than those without. Mechanism tests indicate that SMBs alleviate SMEs' financing constraints and reduce their financing costs, forming a transmission pathway that facilitates market entry. Heterogeneity analysis reveals that this promotional effect is more pronounced in enterprises with higher quality, greater initial capital requirements, and technology-intensive industries, as well as in eastern regions and areas with lower fiscal decentralization. Additional analysis further confirms that the establishment of SMBs significantly enhances the employment absorption capacity of SMEs thereby effectively increasing the regional employment scale. Compared with existing research, the marginal contributions of this study are primarily reflected in three aspects: First, at the theoretical level, it systematically explains the impact of inclusive microcredit on SMEs market entry and its underlying mechanisms by integrating theoretical models with empirical evidence. This research addresses the insufficient focus on SMEs “market entry” behavior of existing literature, enriching the theoretical framework of SMEs credit while responding to academic debates and skepticism regarding the effectiveness of inclusive microcredit policies. It provides robust empirical evidence from the Chinese context supporting the proposition that “inclusive finance empowers SMEs”. Second, at the methodological level, given the gradual establishment of MSME branches, the study employs a staggered DID approach. By appropriately controlling various fixed effects and exogenous variables, and integrating econometric methods such as instrumental variables and double machine learning, it effectively mitigates endogeneity issues. This provides more robust causal identification evidence for how inclusive micro credit promotes SME market entry. Third, at the data level, we collected and compiled micro data from the EPS China Industrial and Commercial Enterprise Database to measure SME market entry. This data selection avoids sample selection bias potentially encountered in questionnaire-based datasets like the China SMEs Survey or National Tax Survey, while also overcoming measurement errors arising from using SMEs Board or ChiNext-listed companies as proxies for micro and small enterprises. It enables accurate and comprehensive depiction of the spatiotemporal evolution of SMEs across Chinese counties before and after the establishment of SMBs at a finer granularity. Based on research findings, this paper proposes the following policy recommendations. First, strengthen SMEs financial services within small and medium financial institutions and deepen the development of specialized institutions. Building on the “localized and specialized” positioning of small and medium financial institutions, encourage them to increase the deployment of specialized institutions for micro and small enterprises, reversing the tendency to favor large clients. Second, improve the mechanism for coordinated government and market efforts to establish a long-term micro and small enterprise financial mechanism characterized by “willingness to lend, ability to lend, and expertise in lending”. Simultaneously, deepen rural financial reforms to bridge the “last mile” of policy implementation, achieving an organic integration of an “effective government” and an “efficient market”. Third, implement targeted financial support strategies to optimize credit resource allocation. Financial resource deployment should balance inclusiveness and structural focus, ensuring basic coverage while prioritizing sectors aligned with national strategic priorities, such as technological innovation and manufacturing, and underdeveloped regions.
王贤彬, 许婷君, 严祥起. 普惠小微信贷供给与小微企业进入——来自小微支行设立的证据[J]. 金融研究, 2025, 546(12): 95-113.
WANG Xianbin, XU Tingjun, YAN Xiangqi. Inclusive Small and Micro Credit Supply and Entry of Small and Micro Enterprises: Evidence from the Establishment of Small and Micro Banks. Journal of Financial Research, 2025, 546(12): 95-113.
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