How does the Minimum Wage Affect Investment Strategies of SMEs

• 1、School of Finance and Statistic,Hunan University

Abstract：The gradual improvement of the minimum wage standard has brought new challenges and opportunities to China\'s Small and Medium Enterprises (SMEs). In order to explore the dynamic changes of their investment strategies, this paper based on the panel data of 2643 small and medium-sized micro enterprises in the New OTC (over-the-counter) Market from 2015 to 2020, used the Bidirectional Fixed Effect Model to explore the impact of changes in the minimum wage standard on the internal investment strategies of SMEs from the three levels of new investment, innovative investment and fixed assets investment. The results show that the rise of the minimum wage standard has a significant positive impact on new investment and innovation investment of SMEs, but it will inhibit fixed assets investment. This impact is particularly significant in non-state-owned SMEs, and the change in investment indicators of medium-sized enterprises is 1.5 to 2 times that of Micro and Small-sized Enterprises, further proving that the impact of the minimum wage standard will vary due to the characteristics of the enterprise. The research conclusion indicates that SMEs should have a correct understanding of their own development status and adjust their investment strategies to provide a good environment for enterprise development. At the same time, the government needs to grasp the adjustment range when formulating the minimum wage standard and actively play the positive role of the minimum wage standard policy.

Keywords： Finance Minimum wage standard SMEs New Investment R&D Investment Fixed Assets Investment