Precautionary Savings, Financing Deficit Sensitivity, and Investment Behavior of Micro and Small Enterprises: A Cross-Country Comparison

Haoran Yu

doi:10.47297/wspdecWSP2515-797305.20261005

PDF
导出
分享
收藏
专辑

Precautionary Savings, Financing Deficit Sensitivity, and Investment Behavior of Micro and Small Enterprises: A Cross-Country Comparison

10卷第5期

浏览量: 0 Downloads: 0

Precautionary Savings, Financing Deficit Sensitivity, and Investment Behavior of Micro and Small Enterprises: A Cross-Country Comparison
Precautionary Savings, Financing Deficit Sensitivity, and Investment Behavior of Micro and Small Enterprises: A Cross-Country Comparison
Guizhou University, Guiyang, Guizhou, 550025, China
2026年10卷第5期页码：26-31
网络首发：2026-08-14，

纸质出版：2026-05-30
DOI：10.47297/wspdecWSP2515-797305.20261005
Accepted：

Scan QR Code

Haoran Yu. (2026). Precautionary Savings, Financing Deficit Sensitivity, and Investment Behavior of Micro and Small Enterprises: A Cross-Country Comparison. 发展经济学, 10(5), 26-31.

Yu Haoran.Precautionary Savings, Financing Deficit Sensitivity, and Investment Behavior of Micro and Small Enterprises: A Cross-Country Comparison[J].Development Economics of China,2026,10(05):26-31.
Haoran Yu. (2026). Precautionary Savings, Financing Deficit Sensitivity, and Investment Behavior of Micro and Small Enterprises: A Cross-Country Comparison. 发展经济学, 10(5), 26-31. DOI： 10.47297/wspdecWSP2515-797305.20261005.

Yu Haoran.Precautionary Savings, Financing Deficit Sensitivity, and Investment Behavior of Micro and Small Enterprises: A Cross-Country Comparison[J].Development Economics of China,2026,10(05):26-31. DOI： 10.47297/wspdecWSP2515-797305.20261005.

摘要

Abstract

Micro and small enterprises (MSEs) constitute the most vibrant segment of the national economy

yet the financing risk inherent in their investment decisions remains under-examined. Building on precautionary savings theory and the financing deficit hypothesis

this paper compares the internal financing behavior of Chinese and U.S. MSEs using World Bank Enterprise Survey (WBES 2024) data on roughly 3

900 firms in the fully specified regressions. Three findings emerge. First

after full controls

Chinese MSEs' internal financing dependence is about 6.3 percentage points lower than that of U.S. MSEs (p < 0.001). Second

the marginal response to financing obstacles in China (-5.792) exceeds the U.S. response (-4.563) by 27%

concentrated among mixed-financing firms (median-regression interaction -12.50

p < 0.001). Third

bank credit lines relieve internal financing dependence more strongly in China

whereas collateral requirements partially offset this releasing effect. This paradox of moderate perceived financing difficulty but sharper behavioral responses to financing shocks motivates institutional reforms in financial regulation

credit infrastructure

and policy coordination to reduce MSEs' financing vulnerability.

关键词

Keywords

references

Stiglitz J. E. , & Weiss A . ( 1981 ). Credit rationing in markets with imperfect information . The American Economic Review , 71 ( 3 ), 393 , 410 .

Myers S. C. , & Majluf N . S . ( 1984 ). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics , 13 ( 2 ), 187, 221.

Beck T. , Demirgüç-Kunt A. , & Maksimovic V . ( 2005 ). Financial and legal constraints to growth: Does firm size matter? The Journal of Finance , 60 ( 1 ), 137 , 177 .

Minton B. A. , & Schrand C . ( 1999 ). The impact of cash flow volatility on discretionary investment and the costs of debt and equity financing . Journal of Financial Economics , 54 ( 3 ), 423 , 460 .

Opler T. , Pinkowitz L. , Stulz R. , & Williamson R . ( 1999 ). The determinants and implications of corporate cash holdings . Journal of Financial Economics , 52 ( 1 ), 3 , 46 .

Frost J. , Gambacorta L. , Huang Y. , Shin H. S. , & Zbinden P . ( 2019 ). BigTech and the changing structure of financial intermediation . Economic Policy , 34 ( 100 ), 761 , 799 .

Berger A. N. , & Udell G . F . ( 1995 ). Relationship lending and lines of credit in small firm finance. The Journal of Business , 68 ( 3 ), 351, 381.

Carroll C . D . ( 1997 ). Buffer-stock saving and the life cycle/permanent income hypothesis. The Quarterly Journal of Economics , 112 ( 1 ), 1, 55.

North D . C . ( 1990 ). Institutions, Institutional Change and Economic Performance. Cambridge University Press .

Fazzari S. M. , Hubbard R. G. , & Petersen B . C . ( 1988 ). Financing constraints and corporate investment. Brookings Papers on Economic Activity , 1988 ( 1 ), 141, 206.

Riddick L. A. , & Whited T . M . ( 2009 ). The corporate propensity to save. The Journal of Finance , 64 ( 4 ), 1729, 1766.

Acharya V. V. , Almeida H. , & Campello M . ( 2007 ). Is cash negative debt? A hedging perspective on corporate financial policies . Journal of Financial Intermediation , 16 ( 4 ), 515 , 554 .

Ağca S. , & Mozumdar A . ( 2008 ). The impact of capital market imperfections on investment, cash flow sensitivity . Journal of Banking & Finance , 32 ( 2 ), 207 , 216 .

Andrén N. , & Jankensgård H . ( 2015 ). Wall of cash: The investment, cash flow sensitivity when capital becomes abundant . Journal of Banking & Finance , 50 , 204 , 213 .

Ayyagari M. , Demirgüç-Kunt A. , & Maksimovic V . ( 2008 ). How important are financing constraints? The role of finance in the business environment . The World Bank Economic Review , 22 ( 3 ), 483 , 516 .

Azmat Q. , & Iqbal A . M . ( 2017 ). The role of financial constraints on precautionary cash holdings: Evidence from Pakistan. Economic Research-Ekonomska Istraživanja , 30 ( 1 ), 596, 610.

Beck T. , Demirgüç-Kunt A. , Laeven L. , et al . ( 2006 ). The determinants of financing obstacles . Journal of International Money and Finance , 25 ( 6 ), 932 , 952 .

Berger A. N. , & Udell G . F . ( 2006 ). A more complete conceptual framework for SME finance. Journal of Banking & Finance , 30 ( 11 ), 2945, 2966.

Chodorow-Reich G. , Ghent A. , & Haddad V . ( 2021 ). Asset insulators . The Review of Financial Studies , 34 ( 3 ), 1509 , 1539 .

Cull R. , Li W. , Sun B. , et al . ( 2015 ). Government connections and financial constraints: Evidence from a large representative sample of Chinese firms . Journal of Corporate Finance , 32 , 271 , 294 .

Ding S. , Guariglia A. , & Knight J . ( 2013 ). Investment and financing constraints in China: Does working capital management make a difference? Journal of Banking & Finance , 37 ( 5 ), 1490 , 1507 .

Ding S. , Kim M. , Zhang X. , et al . ( 2025 ). The impact of cash flow uncertainty on investment, cash flow sensitivity in China: The debt financing channel . International Journal of Finance & Economics , 30 ( 4 ), 3986 , 4003 .

Ek C. , & Wu G . L . ( 2018 ). Investment, cash flow sensitivities and capital misallocation. Journal of Development Economics , 133 , 220 , 230 .

Gilchrist S. , & Himmelberg C . P . ( 1995 ). Evidence on the role of cash flow for investment. Journal of Monetary Economics , 36 ( 3 ), 541, 572.

Guariglia A. , Liu X. , & Song L . ( 2011 ). Internal finance and growth: Microeconometric evidence on Chinese firms . Journal of Development Economics , 96 ( 1 ), 79 , 94 .

Han S. , & Qiu J . ( 2007 ). Corporate precautionary cash holdings . Journal of Corporate Finance , 13 ( 1 ), 43 , 57 .

Hsieh C . -T., & Klenow P . J. ( 2009 ). Misallocation and manufacturing TFP in China and India. Quarterly Journal of Economics , 124 ( 4 ), 1403, 1448.

Huang Q. , Xiong M. , & Xiao M . ( 2022 ). Does managerial ability affect corporate financial constraints? Evidence from China . Economic Research-Ekonomska Istraživanja , 35 ( 1 ), 3731 , 3753 .

Islam S. S. , & Mozumdar A . ( 2007 ). Financial market development and the importance of internal cash: Evidence from international data . Journal of Banking & Finance , 31 ( 3 ), 641 , 658 .

Jiang F. , Kim K. A. , Ma Y. , et al . ( 2019 ). Corporate culture and investment, cash flow sensitivity . Journal of Business Ethics , 154 ( 2 ), 425 , 439 .

Love I . ( 2003 ). Financial development and financing constraints: International evidence from the structural investment model . Review of Financial Studies , 16 ( 3 ), 765 , 791 .

Norden L. , & Wagner W . ( 2008 ). Credit derivatives and loan pricing . Journal of Banking & Finance , 32 ( 12 ), 2560 , 2569 .