The impact of financing costs on liquidity risk——The perspective from the heterogeneity of small and micro enterprises’ scale

Abstract

Small and micro enterprises constitute an important micro foundation for the high-quality development of China’s market economy. Affected by multiple factors, their high financing costs are highly likely to trigger liquidity risks. However, the direction and degree of the influence between the two still lack targeted quantitative research. This paper will focus on small and micro enterprises on the New Third Board, analyze the impact of financing costs on the liquidity risks of these enterprises and measure financing costs and corporate liquidity risks by selecting indicators that match the characteristics of small and micro enterprises, and construct a regression model for empirical research. The study finds that the financing costs of small and micro enterprises are positively correlated with their liquidity risks. An increase in financing costs will significantly exacerbate liquidity risks. This research result is consistent with the relationship between the financing costs and liquidity risks of large enterprises. This study has constructed a quantitative analysis framework. The relevant conclusions can provide references for small and micro enterprises to optimize their financing decisions and prevent liquidity risks, and can also provide empirical support for financial institutions and government departments to formulate relevant policies. It has practical significance for ensuring the high-quality development of the real economy.