This paper tests whether local financial development matters for SMEs' growth performance. We develop a theoretical model framework based on banks' and firms' profit-maximizing behavior that critically hinges upon credit default risk ratio. We argue that an expansion of branch network would...

China's attempts to reduce financial system risk through tighter shadow banking regulation may have had unexpected effects. Using the regulatory policy of the New Capital Management Regulation, this paper investigates the impact of tightening shadow banking size on SMEs' performance using an...