Financial Repression Approach to the Financing Difficulty of the Small and Medium-sized Enterprises: Empirical Evidence from China

It is a universal phenomenon of the financing difficulty of the small and medium-sized enterprises, and opinions vary from theory to practice about its causes. With the Grey Prediction GM(1,1) Model, this paper predicts the monetization ratio and FIR in the next few years properly. With the theory of financial repression and financial deepening, this paper focuses on the performance of the financial repression in China and its influences on the financing of the small and medium-sized enterprises. The paper argues that the financial repression in China should be responsible for the financing difficulty of the small and medium-sized enterprises. The paper concludes that accelerating the process of the reform of interest rates and promoting the efficiency of the financial market system etc. are the ways to overcome the difficulty.