Finance Company Functions, Financing Environment And The Group's Listed Companies Financing Constraints

Promote supply-side structural reform vigorously must ensure the realization of the“capacity reduction,de-stocking,de-leveraging,cost reduction,improving underdeveloped areas”.To reduce the cost,to solve Chinese enterprise existing“difficult financing process,high financing cost” problem and to effectively alleviate financing constraints,are very urgent and important tasks.Therefore,theorists have discussed the impact of external factors such as monetary policy,market-based interest rates,financial development,the politic relations and finance relations,and the impact of internal factors such as information asymmetry and agency problem on corporate financing constraints.But there is no literature to examine the impact of finance companies,which is intra-Group non-bank financial institutions,on the financing constraints of group members listed companies.Since the first finance company found in China in 1987,the practice has showed that it plays an important role in serving group and its members to get on investment and financing activities.In 2004,the CBRC promulgated “the Measures for the Administration of Finance Companies of Enterprise Groups(2004)”,which clearly defined the nature of the finance companies.It stipulated that “finance companies refer to those non-bank financial institutions that purpose to strengthen the centralized management of enterprise funds and raise the capital use efficiency of enterprise groups,and provide financial management services for group member companies.”Further,on 28 October 2014,“Guidance Opinion on Further Promoting the Healthy Development of Finance Companies by Central Enterprises” issued by the SASAC and CBRC pointed out that finance companies should “Give full play to the role of four platform: the platform of group fund collection,the group fund settlement platform,the platform of group funds Monitoring and the platform of group financial Services,to promote the Group's optimization of resource allocation,financial cost savings,capital security and operational efficiency.” For capital monitoring function mainly depends on the collection function,fund settlement and financial servicefunctions in play.According to the previous research and aforementioned laws and regulations,this dissertation defines the finance company's function as: fund collection function,fund settlement function,entrusted business function,loan business function and guarantee business function.So,could the finance company's function display ease the financing constraints of group listed companies? Specifically,whether the finance company's fund collection function,the fund settlement function,the entrusted function,the loan function and the guarantee function have an impact on the financing constraints of group listed companies ? Further,do the impacts of the above five functions on the financing constraints of group listed companies change under different external financing environment such as different monetary policies,different market interest rate and different level of financial development? What effect will the internal financial environment such as the property right,the financial structure,the organizational structure and the governance structure have on the relation between financial company's functions display and the group listed companies' financing constraints?Therefore,this dissertation constructs the theoretical and empirical research framework of “finance company function-financing environment-financing constraints of group listed companies”,and adopts the date from CSMAR and WIND Database from 2009 to 2015 and “China Enterprise Group Finance Company Yearbook”,theoretical analyzes and empirical tests the relation among finance company functions,financing environment and the group listed companies financing constraints.Research contents include:(1)Based on the theory of internal capital market,the theory of transaction cost and the theory of financing priority,the paper analyzes theoretically the influence mechanism of finance company's function display on financing constraints of group listed companies and empirically tests if the funds collection function,the fund settlement function,entrusted function,loan function and guarantee function of finance company influence the financing constraints of group listed companies.(2)Use credit theory and financial development theory to analyze the impact of finance companies' functions on the financing constraints of group listed companies under different external financing environments,and by grouping to examine the relationship between financecompanies' functions and financing constraints of group listed companies under different degree of easing of monetary policy and marketization of interest rates and different level of financial development.(3)Based on credit theory and corporate governance theory,this dissertation analyzes theoretically the relation between finance company's functions display and financing constraints in different internal financing environments,and confirms the relation between the finance company's function and the financing constraints exists difference under different nature of property rights,financial structure,organizational structure and governance structure.Without considering the different internal and external financing environment,this dissertation finds: the fund settlement function can reduce the group's financial redundancy,speed up the allocation of funds and the efficiency of distribution,revitalize the group's capital stock,make good use of capital flow.The loan function can avoid external financing transaction cost and the guarantee function can display the effect of "credit guarantee" and "credit risk diversification" to optimize the group internal fund allocation,enhance the financing ability and broaden the financing channels of group listed companies so as to ease their facing financing constraints effectively.And the fund collection functions and the entrustment functions have no significant mitigating effect on the financing constraints of the group listed companies.Considering the external financing environment,this dissertation finds:(1)During the tightening of monetary policy,the display of the fund settlement functions,the loan function and the guarantee function has a more significant mitigating effect on the financing constraints of group listed companies,and the fund settlement function is strongest among the three.(2)Compared with the relatively high level of interest rate marketization,when the level of interest rate marketization is a little low,the fund collection function plays a more significant and stronger role in alleviating the financing constraints of the group listed companies;no matter how the interest rate marketization level is,the fund settlement function and the loan function all can alleviate the financing constraints of the group listed companies significantly,and there is no significant difference between them.While the entrusted business function still does not have significant alleviating effect.And the guarantee function plays a more significant role in easing the financingconstraints of group listed companies when the level of interest rate marketization is high.(3)Compared with the samples from region of lower level of financial development,the fund settlement function,loan function and guarantee function play a more significant role in alleviating the financing constraints of group listed companies that are from regions of higher level of financial development.However,The fund collection function and entrusted function have no significant effect on the financing constraints of group listed companies.Considering the internal financing environment,this dissertation finds:(1)The fund collection function and the fund settlement function have a more significant easing effect on the financing constraints of group listed companies that are state-controlled.The loan function and the guarantee function have a more significant easing effect on the financing constraints of group listed companies that are non-state-controlled.And the entrusted functions have no significant effect on the financing constraints of group listed companies no matter they are state-owned or not.(2)Using the asset-liability ratio reflects the financial structure of the group listed companies,it is found that the capital settlement function,entrusted function and loan function of the finance company can more significantly alleviate the financing constraints of sample companies with lower asset-liability ratio.While the guarantee function played the same significant role in alleviating the financing constraints of higher asset-liability ratio group listed companies or lower.(3)Using ultimate equity structure of reflects organizational structure of group listed companies,it is found that the capital settlement function,entrusted function,loan function and guarantee function can more significantly alleviate the financing constraints of the sample company with the less level of the equity structure.However,the fund collection function has no significant effect on the financing constraints of the two sample groups.(4)Using the cash flow right of the ultimate shareholders reflects the governance structure,it is found that the fund settlement function,the loan function and the guarantee function can more significantly alleviate the financing constraints of sample companies with higher cash flow rights.However,the fund collection function and the entrusted function have no significant alleviating effect on the financing constraint of the two group sample companies.The possible innovations in this dissertation are:(1)As for the way to mitigate the financing constraints of the group listed companies,this dissertation changed from focusing on the external financial institutions and internal corporate governance to focusing on the transformation of the functions of the internal financial institutions.This dissertation studies the impact of the finance company,an intra-group non-bank financial institution,on the financing constraints of listed companies from the perspective of the group's endogenous financial.The research perspective is innovative and can open up a new research perspective for the later study on relation between the finance companies that are intra-group non-bank financial institutions and the financing constraints of listed companies.(2)The study about the functions of finance companies achieves the transition from overall study to specific study.This dissertation divides the functions of finance companies into five functions: the fund collection function,the capital settlement function,the entrusted function,the loan function and the guarantee function,and quantifies the efficiency of the five functions of the financial companies.It systematically and completely analyzes how the five functions display effect on the financing constraints of group listed companies,and empirical test the impact of these functions on the financing constraints of the group listed companies.(3)As for the consideration of internal and external financing environment that affects the relationship between finance company functions and the financing constraints of group listed companies,this paper achieves the transition from individual level to all-round level.This dissertation not only considers the influence of external financing environment such as monetary policy,market-based interest rate and financial development,but also considers the influence of internal financing environment such as property right,financial structure,organizational structure and governance structure on the financing constraints of group listed companies.Compared with previous studies this paper becomes more systematic and comprehensive.(4)This dissertation constructs the general theoretical analysis and empirical research framework of “finance company function-financing environment-financing constraints of group listed company”,and puts finance company functions,financing environment and financing constraints of group listed company into the same analysis framework,takes the external financingenvironment such as monetary policy,market-based interest rate and financial development as well as the internal financing environment such as the property nature,financial structure,organizational structure and governance structure as the environmental variables,empirically tests that under different financing environment,the finance company functions impact differently on the financing constraints of listed companies,and explore in depth about the economic consequences of the finance company's functions and the environmental conditions that affect finance company functions.The theoretical significance of this dissertation lies in:(1)Defining the function of finance company as follows,the fund collection function,the fund settlement function,the entrusted business function,the loan business function and the guarantee business function,studying its influence on the financing constraints of group listed members of the group,can rich theoretical research about finance company functions display and its economic consequences.(2)This dissertation empirical tests by large sample on the impact of the above five functions of finance companies on the financing constraints of group listed companies,and examines the impact of different internal and external financing environment on the relationship between the two,to further deepen the empirical research on the functions display of finance companies and the financing constraints of listed group companies,and has provided the necessary empirical evidence for the follow-up study.(3)This dissertation puts the functions of finance company,the financing environment and the financing constraints of group listed companies into the same theoretical and empirical analysis framework,builds an important bridge for research about macro-micro financing environment's how effect on micro-economic actors and their consequences.The realistic meanings are as follows:(1)Under the strategic background of“capacity reduction,de-stocking,de-leveraging,cost reduction,improving underdeveloped areas” in our country,studying the influence of finance company's function on the financing constraints of group listed companies will help to better optimize the functional allocation of the finance companies,reduce the financing cost of group listed companies,and provides a new effective way to alleviate the financingconstraints of group listed companies.(2)Studying the influence of finance companies' functions on the financing constraints of group listed companies under different internal and external financing conditions can help groups and finance companies to adapt to internal and external financing environment,adjust and optimize function allocation reasonably,and effectively alleviate the financing constraints faced by group members.(3)It is helpful for the government regulatory departments in accordance with the effect that external environmental factors make on the relation between finance company functions and financing constraints,to formulate and revise of relevant policies and systems,improve the regulatory approach to better protect the finance company's functions.(4)It is helpful for the corporate governance and management to improve the corporate governance structure and methods,improve the management mechanism and methods,and give full play to the finance company's functions according to the effect that internal environment factors make on the relationship between the finance company's functions and financing constraints.