The Theoretical And Empirical Researches On The Mechanism Of Credit Policy Influencing Enterprises’ Capital Structure

As the global economic integrated and the level of market-oriented reforms inChina deepened, the enterprises which are the main market body, are financingincreasingly actively. However, Chinese enterprises have limited financing channelsbecause China’s capital market is not developed enough. Since the famous “MMtheory” was made by Modigliani and Miller in1958, the studies about enterprises’capital structure become the focus of economics and management science. Foreignstudies of capital structure have focused on the determinants of enterprises’ capitalstructure and the degree of its influence. Since the1990s, to explore the impact ofcapital structure from a macroeconomic policy perspective has become the focus, andthere are lots of related empirical studies. Although the empirical studies whichexplore the credit policy, as an important economic policy impacting capital supply,affecting enterprises’ capital structure are increasing, while the theoretical researchabout the mechanism of credit policies affecting enterprises’ capital structure is rarelyseen, in-depth to the empirical research results about different credit policiesinfluencing the enterprises of different ownership and heterogeneous industry aremore limited. Therefore, this article will explain the microscopic mechanism of creditpolicies affecting enterprises’ capital structure by attempting to build theoreticalmodels, empirical researches and compared international experiences. The study willnot only broaden the source of enterprises’ capital structure influencing mechanismtheory, but also provide a theoretical foundation and empirical basis for thedecision-making body through adjusting credit policies to optimize enterprises’capital structure.After reviewing the latest theoretical and empirical researches on the progress ofthe factors affecting capital structure, the paper introduces the credit policy toModigliani and Miller’s basic analytical framework, and builds the mechanismtheoretical model of credit policy influencing the enterprise’s capital structure todeeply analyze the microscopic mechanism of the credit policy affecting theenterprise’s capital structure. The studies show as follows. If the enterprise profits,there is a negative correlation relationship between the enterprise’s capital structureand credit policy. If the enterprise losses, they are positively correlated. The rate ofcapital structure change is related to the value of the debt and stocks of the enterprise in the initial condition. Due to the presence of an inverted U-shaped relationshipbetween corporate value and credit policy, the corresponding optimal theoreticalvalue of credit policy exists. After adding the tax variable, conclusions are basicallyconsistent with the conclusions of the basic model, but the difference is that theoverall level of the enterprise’s capital structure changes, while specific changes arerelated to the way of taxation of the enterprise. The enterprise value under the taxmodel is lower than that without tax, and the value of the credit policy variables underoptimal capital structure changes along with the way of taxation.After that, based on the Shanghai and Shenzhen listed companies from2001to2010as samples’ datum, this paper makes empirical researches on different creditpolicies and their combination affecting the degree of enterprises’ capital structureand conspicuousness from the levels of the listed companies, state-owned andnon-state-owned listed companies, and heterogeneous industries listed companies.The empirical studies from overall level of listed companies show that the supply ofcredit brings the synthetic adjustment of enterprises’ capital structure and the effect isconspicuous. The descending order of credit policies impacting enterprises’ capitalstructure are the statutory deposit reserve ratio, deposit and loan spreads, commercialbank capital regulation, and the interest rate is extremely weak. As the adjustingspeed of capital structure under different credit policies, the bank capital regulation isthe fastest, and the deposit reserve is the second, while adjusting speed of interest ratepolicy appears to be the slowest.Secondly, empirical results of different ownership listed companies show thatthere is a positive relationship between the credit supply change and enterprises’ capitalstructure in both state-owned and non-state-owned listed companies. The impact of thestatutory deposit reserve ratio as well as the deposit and loan spreads policies on thenon-state-owned listed companies are larger than state-owned listed companies, while thecredit supply and excess capital adequacy ratio have greater effect on the state-ownedlisted companies. According to the dynamically adjusting speed of the credit policyinfluencing enterprises’ capital structure, when the total credit scale changes, the speedof non-state-owned listed companies adjusting is faster than the state-owned listedcompanies, meanwhile, the state-owned listed companies respond to different creditpolicies in consistent with the conclusions of the full samples. While the impact ofdifferent credit policies on dynamical adjustment of non-state-owned listed companies’capital structure is not significant, the adjustment speed of non-state-owned listedcompanies is significantly higher than state-owned listed companies. Then, the results from the heterogeneous industry level indicate that there aredifferences in the impact of credit policies on enterprises’ capital structure ofdifferent sectors. Among different industries, credit policies have the greatest impacton the capital structure of the public utilities enterprises, and the influence oncomprehensive industry enterprises is greater than commercial enterprises which isalso greater than industrial enterprises. Furthermore, the results of dynamic panel dataanalysis of different credit policies changes affecting various enterprises’ capitalstructure adjusting speed in different industries show that the capital structure adjustingspeed is in the descending order of commercial, comprehensive, real estate, industry andpublic utilities listed companies when the total credit supply changes. The adjustingspeed of comprehensive listed companies’ capital structure affected by various types ofcredit policies is fastest, followed by commercial and real estate enterprises.Furthermore, this article chooses the United States, German, and Japan as threerepresentative countries, and carries on a comparative analysis of the historicalevolution and management mechanism of their credit policies. Meanwhile, this paperalso reviews China’s commenced credit policies which impact on the financialdecisions of Chinese enterprises with interest rate, deposit reserve ratio and capitalregulation system, then carries out a system comparison of the credit policies inrepresentative developed countries with China, which can not only excavate thedifferences in credit policy development under different institutional environment,but also provide a policy learning of credit policy adjusting from the internationallevel to promote China’s enterprises to optimize the capital structure.According to the results of theoretical models, empirical researches andinternational experiences, this paper argues that in order to speed up the marketizationof China’s reform process and optimize enterprises’ capital structure, the Chinesegovernment should actively create conditions to give a full play of the credit policy inpromoting the market value of enterprises. Therefore, from the interest rate, depositreserve ratio, bank capital regulation as main credit policy tools, and the credit policiesimplementation on enterprises of different ownership and heterogeneous industries, thispaper finally makes the policy suggestions to provide a reference for the decision-makingdepartment to adjust the implementation way and management mechanism to optimizethe enterprises’ capital structure and maximize the enterprises’ value.