Institutional transition and the financing of high-tech SMEs in China: a longitudinal perspective

This article examines changes in Chinese high-tech SMEs’ access to both bank and informal finance in response to the institutional changes relating to the private sector and financial transactions. It draws upon two rounds of face-to-face interviews with the owners of high-tech SMEs and finance providers in the Chinese provinces of Guangdong and Guangxi covering two consecutive time periods: from 1998 to 2004 and then from 2004 to 2009. The findings show that the effects of the changes in institutional regulations on the availability of finance to high-tech SMEs vary according to the type of finance provider. Access to informal sources of finance grew, including to longer-term equity finance, whereas that to bank finance did not significantly improve.