Abstract：Reasonable selection of financing channels is an important prerequisite for the innovation of SMEs. Using the patent data of companies listed on the SME board and GEM from 2011 to 2019, this paper empirically tests the impact of China's banking and stock market on the innovation output of SMEs. It is found that the scale expansion of banking and stock market improves the number of innovation output of SME. Because banking can effectively avoid loan risk, its promoting effect is more significant. The intermediary effects of enterprise financing constraints, enterprise credit financing and equity financing also verify the above conclusions. From the perspective of innovation quality, banking and stock market can improve the innovation output quality of SMEs. In this regard, on the one hand, SMEs should adopt appropriate diversified financing mode according to their own innovation characteristics to ensure the stability of their innovative capital sources. On the other hand, under the conditions of changing innovation environment and increasing innovation systematization, the government should pay attention to the pertinence and efficiency of the fund allocation function of banks and stock markets, and provide innovation subsidies for SMEs, so as to fully realize the basic and overall objectives of China's innovation achievements.

Keywords: small-and-medium board market(SME); growth enterprise market(GEM); financing constraints; financing level; mediating effect