Research on the Capital Markets and Financing Constraints of High-tech SMEs in China

The financing constraints have become the bottleneck in the development of High-tech SME in China. This paper is intended to analyze the macro-mechanism by which financial development promotes economic growth. More specifically, it studies the role of capital market in alleviating the financing constraints. To begin with the essences of High-tech SMEs and their financing needs, it contends that the equity financing from capital market is a feasible and suitable way. Then the related theories are reviewed to construct the structural investment model, which is used to test whether the availability of capital market will and to what extent alleviate High-tech SMEs' financing constraints in practice. The study shows that the financing constraints of High-tech SMEs are relatively severe and the role of capital market is significant.