Impact of industrial park platforms on SME financing: Evidence from the LD Park

Author

Zhendong LIU, Singapore Management UniversityFollow

Publication Type

PhD Dissertation

Version

publishedVersion

Publication Date

10-2024

Abstract

Small and medium-sized enterprises (SMEs) are essential to the Chinese economy. However, when seeking financing, SMEs often face stricter financing conditions and higher financing costs due to information asymmetry in the market, commonly referred to as the problem of “difficult and expensive financing.” This issue severely limits the growth potential of SMEs. This study explores the positive role that industrial parks play as a bridge between banks and SMEs in alleviating the “difficult and expensive financing” problem. The study surveyed 54 industrial parks and collected 268 valid questionnaires from banks, industrial parks, and SMEs. The data analysis yielded the following conclusions:

(1) From the bank’s perspective, industrial parks play a role in customer acquisition before lending, enabling the bank to acquire clients in bulk, identify target customers, and reduce customer acquisition costs. The longer the industrial park has been established, the more pronounced this effect.

(2) From the bank’s perspective, industrial parks can enhance creditworthiness during lending by providing guarantees and reducing the information asymmetry between banks and enterprises. The longer the industrial park has been established, the more pronounced this effect.

(3) From the bank’s perspective, industrial parks assist in risk management after lending, contributing to refined post-loan management and risk monitoring. The longer the industrial park has been established, the more pronounced this effect.

(4) From the SME’s perspective, industrial parks simplify the application process before financing, facilitating a streamlined application procedure and broadening financing channels.

(5) From the SME’s perspective, industrial parks enhance creditworthiness during financing by improving access to finance, increasing loan amounts, lowering interest rates, extending loan terms, improving loan approval speed, increasing disbursement efficiency.

This study analyses the unique role that industrial parks play in the financing of SMEs across the pre-loan, mid-loan, and post-loan stages, providing a new analytical and problem-solving perspective to address the issue of “difficult and expensive financing” for SMEs. The data analysis indicates that relying on the industrial park platform to provide financial support for SMEs is an innovative solution to their financing challenges. This approach enhances the accessibility of financing for SMEs, increases the lending rates from banks to SMEs, and improves the overall financial service level of the parks, thereby attracting more quality enterprises to the park and boosting its competitiveness and attractiveness.

Keywords

SME financing, information asymmetry, industrial parks, difficult and expensive financing

Degree Awarded

Doctor of Bus Admin (CKGSB)

Discipline

Business Administration, Management, and Operations | Finance and Financial Management

Supervisor(s)

WANG, Rong

First Page

1

Last Page

169

Publisher

Singapore Management University

City or Country

Singapore

Citation

LIU, Zhendong. Impact of industrial park platforms on SME financing: Evidence from the LD Park. (2024). 1-169.
Available at: https://ink.library.smu.edu.sg/etd_coll/638

Copyright Owner and License

Author

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.