| The global economy downturns while both debt size and leverage ratio in major countries surge since GFC.That is to say,maintaining the same level of economic growth needs more and more debt to drive.Meanwhile,Chinese economic growth also slows down,and enters into the New Normal.Increasing attention from different perspectives has been paid to the issue of sharp-rising in debt leverage ratio and fast-growing in debt size in Chinese non-financial corporations.Among them,a large number of foreign institutional bears predict Chinese economy pessimistically in the future period of time.The CPC Central Committee and the State Council put forward the new strategy of Supply Side Structural Reform against the New Normal economic situation in Central Economic Work Conference in December 2015 for its first time.Three important tasks of "Three go,one down and one supplement" were identified as five important tasks in the coming period.The core tasks of deleverage are: Promote and improve the debt structure of non financial corporations in the process of enhancing economic growth and improving production efficiency;Increasing the proportion of equity financing;Reduce leverage gradually in a controllable manner and rhythm;Prevent financial risks and promote sustained and healthy development of economy.Therefore,the issue of sharp-rising in debt leverage ratio and fast-growing in debt size in non-financial corporation has already become a threat to current economic stability and financial security of our country.Study on the high leverage of Chinese non-financial corporation related issue has become a hot topic in the academic field of macroeconomics research in recent years.Leveraged operating is an important feature of modern corporations to achieve its business objectives.Small sized corporations can operate large sized assets through leveraging.Leverage ratio reflects the degree of corporation's debt operation.Individual corporations expect to produce more output and earn higher return on investment by raising higher level of debt leverage,and will have to pay interests to the credit providers as exchange.High debt leverage ratio is actually a double-edged sword to corporations,which can help them expand rapidly and improve profitability,but it will also raise the debt burden cost of corporations,and over-leverage will even lead to debt crisis.On one hand,suggested by the classical theory of capital structure,corporation's leverage ratio reflects its financing decision,corporations will toward its optimal financing structure goal to make active adjustment;On the other hand,the corporation's major financing decisions are also passively determined by their whole countries',or regional financial system.According to the realistic basis and theoretical background above,this paper selects Chinese non-financial corporations as the research sample,starts from the perspective of financing mode,uses the methods of literature reviewing,theoretical model constructing and empirical analysis,and studies the mechanism of increasing debt leverage and problems caused by high-leverage ratio in recent years.This would provides solid research evidence and material for "deleveraging" process of Chinese non-financial corporations in the next step of Supply Side Structural Reform in the future.According to the first chapter's presupposed research framework,this paper firstly reviewed existing related literature in order to provide important theoretical support for subsequent chapters.Secondly,this paper explored economic background of the high-leverage formation of Chinese non-financial corporations,and then analyzed the changes of Chinese non-financial corporation's debt leverage ratio comprehensively from both macro-and micro perspectives by using different sources of public data in order to confirm the fact that who add leverage,who deleverage,whether leverage changes were supported by economic fundamental and so on.Thirdly,based on the profitability divergence between commercial bank industry and non-financial corporation sector,this paper discussed whether high profit of banks originated from infringement on the non-financial corporation interests,and even boosted their leverage ratio and increased their debt burden of interests.Then,by constructing theoretical model and doing some empirical analysis,this paper studied the impact effect of growth of bank credit effect to non-financial corporation's debt leverage ratio.Finally,this paper analyzed the dynamic relationships between macroeconomic fluctuations,bank credit,non-financial corporation's leverage ratio and debt burden of interest,and provided relevant policy suggestions for the next step of deleverage according to the findings and thoughts in this paper.The main conclusions of this paper are as follows:(1)The core point of view in this paper suggests that the high level of debt leverage ratio of Chinese non-financial corporation is determined by the financing mode that dominated by the bank's indirect financing.The proportions of indirect financing in non-financial corporations are far greater than direct financing.In the indirect financing,bank credit dominates,and it is the most important source of financing for non-financial corporations.In recent years,the overall level of debt leverage ratio of non-financial corporation has increased significantly,and there are also structural differences between corporations.The structural partial high leverage ratio phenomenon is mainly concentrated in non-listed corporations,and also state-owned corporations in non-listed enterprises,but they are built on the fact that declining of interest protection multiples,profitability and level of collateral.As a result,it is not fully supported by the economic fundamentals.(2)At the corporation level,high leverage has aggravated the debt burden of non-financial corporation.In recent years,with the rapid growth of bank credit,Chinese commercial banks have increased the leverage ratio and boosted the debt burden of non-financial corporation while ensuring their own reasonable and high profits.Under the assumption of interest rate spreads are the main source of bank's profits,there are no significant relations are founded both between loan rate and firm's leverage ratio,and between loan rate and firm's debt service ratio respectively.There are significant positive correlation shown both between the growth of loan credit and the increase of firm's leverage ratio,and between the growth of loan credit and firm's debt burden respectively.(3)At the Meso level,high leverage has led to low efficiency in the use of bank credit.This paper finds that the growth of bank credit scale aggravates the structural difference between corporation's leverage ratio.Both theoretical model and empirical analysis suggest that corporations differ in their collateral and earnings:(Non-listed corporations and state-owned corporations)firms with high collateral but low earnings gain new credit much easier than firms with low collateral but high earnings(Listed corporations and private corporations).Credits highly concentrated in firms with high collateral but poor earnings would eventually lead to a decline in the efficiency of the use of funds.(4)At the Macro level,the heavy debt burden of highly leveraged non-financial corporations will accelerate the overall pressure of macroeconomic downside and lead to credit squeeze.By constructing SVAR model and using the technology of directed acyclic graph,this paper studies the dynamic relationship and feedback mechanism between macroeconomic fluctuation,bank credit,non-financial corporation's leverage ratio and debt burden of interest.Empirical results shown the growth of credit will increase non-financial firm's debt service ratio,and then debt service ratio would also have strongly negative lag effect on both bank credit and macroeconomic fluctuation as long as the level of debt burden are too heavy and reach certain level of constraints,which will eventually lead to macroeconomic downturn and credit squeeze.My paper's findings bring enlightenment to the pathway of future "deleveraging" process.First of all,implementing the tolerant economic policy and using more incremental capital to deal with highly existing stock of capital would never and ever solve the issue,we should implement a moderately economic policy and let the market itself fully decide.Secondly,the deleveraging process should be reasonable and orderly,and prevent from the "debt-deflation" risk,which might be caused by the excessive policy.Thirdly,we must stick to the purpose of banks serving the real economy,actively adjust the debt structure of enterprises,improve the efficiency of the use of credit funds,and help enterprises reduce the burden of debt interest.Finally,we should change financing mode,boost direct equity financing proportions,and help enterprises to reduce financial leverage while improving the overall profit level of non-financial enterprise. |
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