Research on the Impact of Financing Decisions on Innovation Investment of Small and Medium-sized Enterprises

Abstract

Select relevant data of small and medium - sized enterprises (SMEs) from 2016 to 2020, this paper studied the impact of different financing methods on innovation investment. The results show that equity financing and endogenous financing have promoted innovation investment of SMEs, these two financing methods are both significantly positively correlated with innovation investment. In other words, as the scale of these two types of financing expands, the investment in innovation also increases correspondingly. However, when studying the relationship between debt financing and innovation investment, indicating that debt financing inhibits innovation investment. In addition, the relationship between different types of debt and innovation investment was studied. The results show that all four types of debt financing inhibits innovation investment. Basically, when debt financing goes up, innovation investment goes down. The study shows that the most favorable financing methods for innovation are endogenous financing and equity financing, and both of these financing methods have an incentive effect on innovation.