Financing SMEs and business development as new post Covid-19 economic recovery determinants

This study explores the relationship between the business environment, economic growth, and funding sources of Chinese small- and medium-sized enterprises (SMEs) to determine the relevance of the business environment for technological SMEs. The agency theory was used as a theoretical framework to describe how asymmetric information among SMEs and borrowers affects SMEs’ financial decisions as well as China's investment climate and GDP growth. A binary logistic test was used to assess the financing of SMEs and business development for economic recovery after the pandemic in China. Data from the World Economic Forum and Development Bank were examined. According to the results, funding (e.g., formal and informal) under the banking structure and tax regulation may potentially boost standard credit choices and lower casual credit choices. Consequently, it has demonstrated a considerable impact on GDP growth for technologically small and medium-sized enterprises. This study is the first to examine the asymmetric information and institutional theory regarding funding a café. These findings are essential for business leaders and policymakers concerned with the financial health of small and medium-sized enterprises. Policy implications for important stakeholders are also included in this study.