Insurance Company Shareholding Economic Environment And The Enterprise Investment & Financing

The several opinions about speed up the development of modern insurance industry promulgated by the State Council In August 2014 determines the insurance is the important industry in the modern economy,the basic means of social risk and wealth management,the important channel to improve the level and quality of security,the effective instrument to improve public services and strengthen social management,which defines insurance status and role in the whole national economy and social from the state management level.The new No.10 National Notice specified “encourage insurance company to provide financial support in the form of equity for the development of science technology enterprises,small micro enterprises and strategic emerging industries under the premise of risk control”.As the scale of insurance funds and the insurance enterprise participation number gradually increases,insurance enterprises can no longer be confined to vote with their feet,they become more and more actively involved in corporate governance.The CIRC has had allow insurance funds can be indirect into the market in 1999 and directly into the market in 2004.By the end of 2008,large insurance companies including China Life and Ping An had shareholding in entity enterprise.Especially in October 16 th 2015,Premier Li Keqiang chaired a financial enterprise symposium and pointed out that the financial and the real economy were closely related and mutually promoted.Financial institutions should solve the problem of financing difficulty and expensive effectively and enhance the support to the real economy.Therefore,the use of financial institutions to help businesses survive has become a top priority and insurance shareholding is an effective way to help enterprises solve the difficulties.New institutional economics holds that enterprise investment & financing decision is influenced by its environment which is full of uncertainty,so enterprise to be successful must learn to deal with the adverse effects brought by the uncertainty.As the transition economy and emerging market coexist in China,the macroeconomic environment changes frequently and economic development in various regions becomes unbalanced which has a significant impact on corporate investment & financing behavior.It has been a hot research issue in the academic and practical circles that the impact of the adverse economic environment on corporate investment & financing,while how to mitigate the adverse impact is less involved.With the expansion of the scale of insurance company,insurance is not just a simple tool of indemnity,its financial function is increasingly outstanding,and the level of insurance company involved in corporate governance enhances increasingly.Insurance companies play an enormous role in the development of credit insurance,bank-insurance cooperation mode,small and medium-sized enterprises support.Insurance funds to support the real economy's ability gradually improved,more and more insurance companies began to make strategic investment on the capital market,so impact of Insurance funds in the capital market enhanced significantly.The insurance companies have unique advantages of long-term investment.Insurance funds long-term and stability determines its fit to the stable development of the real economy to provide long-term and stable financial support,and enterprise investment and financing problems can be solved to a large extent.Therefore,this paper will focus on the insurance company shareholding ? economic environment and the enterprise investment & financing behavior.In this paper,the enterprise investment & financing is limited to the scale,efficiency and risks of investment & financing.The scale represents the scale of the loan from financial institution and the capital expansion.The efficiency represents whether the loan increases the efficiency of investment and capital expansion.The risk represents whether the risk level of default and capital expansion decreases after the enterprise obtains the loan.The study of the economic environment includes economic cycle,macroeconomic policy and regional economic development.Based on the study of insurance participation influence on enterprises investment and financing mechanism,this paper mainly focused on the impact of insurance participation on enterprise's investment and financing behavior in adverse economic environment(economic cycle,tightening monetary policy and regional economic backward).At the same time,this paper studied insurance participation's influence on investment and financing of enterprise with properties of different property and studied the insurance participation rate's influence on enterprises investment and financing.Based on China's economic environment,we selects A-share listed companies with insurance shareholders in 2007-2014 as the research sample and Uses norms,empirical and comparative analysis method to analyze how insurance company shareholding affect the investment decisions of enterprises in the uncertain economic environment.The study finds that:Firstly,the paper studies on the influence of insurance company shareholding on investment &financing.The findings are as follows: The insurance company shareholding has a significant impact on investment scale,which will significantly improve the scale of investment;however the impact on investment risk is not significant,which can't boost the efficiency of investment.The insurance company shareholding has significant impact on financing scale and risk,which will significantly improve the scale of investment and decrease financing risk.The insurance company shareholding has little impact on financing efficiency.Secondly,the paper studies on the influence of insurance company shareholding on the scale of investment &financing in various economic environments.The findings are as follows: In the adverse economic environment(economic cycle fluctuations,macroeconomic policy changes,regional economic development imbalance),the impact of the insurance company shareholding on investment & financing scale is significant,which will boost investment& financing scale.Through the inspection of state-owned enterprises and private enterprises,we find the impact of insurance company shareholding on scale of investment& financing doesn't depend on the nature of property rights.Through the inspection of degree of integration of industry and finance,we find insurance shareholding will further increase the scale of investment &financing with the deepening of the degree of integration of industry and finance.Thirdly,the paper studies on the influence of insurance company shareholding on the efficiency of investment &financing in various economic environments.The findings are as follows: In the adverse economic environment(economic cycle fluctuations,macroeconomic policy changes,regional economic development imbalance),the impact of the insurance company shareholding on investment efficiency is significant,which will boost investment efficiency.The impact of the insurance company shareholding on financing efficiency is not significant.Through the inspection of state-owned enterprises and private enterprises,we find the impact of insurance company shareholding on investment efficiency doesn't depend on the nature of property rights.The impact of insurance company shareholding on financing efficiency in the sample of private enterprises increased significantly.Through the inspection of degree of integration of industry and finance,we find insurance shareholding not only can't improve the efficiency of investment,but also increase the inefficient investment behavior with the deepening of the degree of integration of industry and finance.Lastly,the paper studies on the influence of insurance company shareholding on the risk of investment & financing in various economic environments.The findings are as follows: In the adverse economic environment(economic cycle fluctuations,macroeconomic policy changes,regional economic development imbalance),the impact of the insurance company shareholding on financing risk is significant,which will decrease financing risk,while the impact of the insurance company shareholding on investment risk is not significant.Through the inspection of state-owned enterprises and private enterprises,we find the impact of insurance company shareholding on investment risk depends on the nature of property rights.Insurance company shareholding can't reduce the risk of investment in state-owned enterprises,while increase the risk of investment in private enterprises.Although the insurance company shareholding increases investment scale of private enterprise and the efficiency of investment in the adverse economic environment,but increased the risk of investment.With the deepening of the degree of integration of industry and finance,the risk of investment becomes greater.In conclusion,the impact of insurance company shareholding on scale and risk of financing is significant.In the adverse economic environment,the impact of the insurance company shareholding on financing scale and risk is more significant.No matter what kind of economic environment,insurance No matter in what kind of economic environment,insurance company shareholding have no significant impact on financing efficiency.Insurance company shareholding can improve the scale of investment in a variety of economic environment.In the adverse economic environment,insurance company shareholding could boost investment efficiency more significantly.No matter in what kind economic environment,the insurance company shareholding could not reduce the risk of investment.Therefore,the insurance company shareholding's support for the enterprise is conservative,with support more for corporate financing but less for investment.Insurance company shareholding to raise capital allocation efficiency still has huge potential.Innovative research of this paper is as follows:(1)from the point view of insurance shareholding to research how the insurance support the real economy;(2)combining insurance participation and economic environment for research;(3)study insurance shareholding influence on enterprises investment and financing.Research significance of this paper is as follows: to explore whether insurance shareholding could bring more financial resources for the enterprise in the adverse economic environment and how this change affects the enterprise investment and financing behavior.The above problem analysis helps us understand the decision-making behavior of microscopic enterprise financial,provides ideas for Chinese enterprises to become bigger and stronger and advice for financial support of the real economy under the background of the new normal economy.