Research On Leverage Ratio And Its Risks Of China's Finance,Enterprise And Government Sectors

After the global financial crisis in 2008,the Chinese government launched the “four trillion” fiscal stimulus plan and a series of loose monetary policies.The macroeconomic leverage ratio(the ratio of debt to GDP)rose sharply,and a development pattern of debt-driven economy was gradually formed.At present,China's overall debt is controllable,showing the outstanding characteristics of faster growth rate and structural imbalance.Specifically,in the entity sector,non-financial corporations have the highest leverage ratio and higher leverage ratio than other major economies in the world.The government leverage ratio is not high but local government debt and leverage ratios are growing faster.In the financial sector,shadow banking is the main channel for non-financial corporations and local governments to increase leverage.The rapid expansion of its scale further pushes up the leverage ratio of the entity sector,and the systemic risks brought about by it have attracted much attention.In order to prevent high leverage from triggering debt crisis and systemic financial risks,the government at the end of 2015 took “deleverage” as one of the important tasks of supply-side structural reform.In April this year,the central government emphasized that the key areas of structural deleverage were local governments and enterprises(especially state-owned enterprises)and reiterated the strengthening of supervision of shadow banking.Therefore,in the current context,exploring the issue of debt sustainability and financial risk caused by high leverage will have important theoretical and practical significance.At present,there are few researches from the perspective of shadow banking,but more from the perspective of traditional credit business to study how to reduce the overall leverage ratio and how to measure financial systemic risk.However,these studies are difficult to answer: how to effectively strengthen the shadow banking supervision to guide funds from virtual economy to real economy and reduce systemic risks? Under the premise of strengthening the supervision of shadow banking,how to guide non-financial corporations and governments to reduce their respective debt risks? The researches on the above issues are of great significance and reference value for China to steadily promote "structural deleverage".This article is divided into five chapters.The first chapter introduces the research background and significance,research content,innovations and deficiencies,and sorts out relevant research progress at home and abroad.The second chapter analyzes the current situation of the leverage ratio of China's financial,corporate and government sectors,and discusses the risk status of China's economic sector leverage from the overall and structural aspects.The remaining three chapters answer these questions from the leveraged supervision strategy of shadow banking,the leverage decisionmaking mechanism of non-financial corporations,and the fiscal policy assessment of government debt sustainability.In the third chapter,this paper studies the leverage risk of the financial sector shadow banking and its regulatory issues,and answers the question of how to effectively strengthen the financial supervision of shadow banking to reduce systemic risks.From the perspective of asset management,this chapter considers the theoretical model of behavioral game between the participating parties of shadow banking with or without rigid redemption,and analyzes the necessary conditions for effective supervision intervention.Furthermore,this chapter discusses the regulatory dilemma of shadow banking under rigid redemption and the regulatory transformation of shadow banking under net worth management from a theoretical perspective.In the fourth chapter,this paper studies the risk and control of non-financial corporations based on leveraged decision-making model,and answers the question of how to macro-guide non-financial corporations to moderately adjust capital structure to reduce their operational risks and systemic risks under the supervision of shadow banking.Based on the dynamic trade-off theory of capital structure,this chapter constructs a corporate lever decision model based on macro factors,tax shield effect,principal-agent cost and financial distress risk to explore the mechanism by which corporate leverage decisions introduce risks into their own and macroeconomics.Moreover,on the basis of theoretical research,this paper empirically analyzes the role and effectiveness of macroscopic factors that guide the enterprise's leverage decisionmaking,and further explores the causes of the high leverage problem of state-owned enterprises in China.In the fifth chapter,this paper studies the government sector leverage ratio and its risk issues based on debt sustainability,and answers how to adjust fiscal policy to achieve the sustainability of government debt as much as possible under the supervision of shadow banking.Under the framework of debt sustainability analysis,this chapter evaluates the impact of existing fiscal policies on the sustainability of China's government debt from a retrospective perspective,and predicts the evolutionary path of China's government leverage ratio under fiscal policy adjustment or fiscal policy rules,and the impact of these policies on the sustainability of government debt from a forward-looking perspective.The research in this paper shows that(1)under the rigid redemption,the regulator can only conditionally discern the destination of the shadow bank,and conditionally improve the effectiveness of the regulation through strategic intervention.Under the non-rigid redemption,through the shadow bank net worth management to achieve effective supervision,and then guide the funds from virtual economy to real economy.(2)In the context of the shrinking supply of funds by shadow banks,through the macroeconomic policies to appropriately guide the financing costs and profit expectations of enterprises,the enterprises can actively adjust the capital structure and reduce their debt risks.This conclusion does not depend on the ownership structure of the enterprise.(3)Existing fiscal policies cannot achieve sustainable government debt,but the implementation of fiscal policies targeting specific debt levels,supplemented by relevant systems to eliminate fiscal authorities' deficit preferences,can achieve sustainable government debt.Under the new normal background of China's economic growth slowdown and structural transformation and upgrading,the research results of this paper will contribute to the steady progress of structural deleverage,improve the effectiveness of shadow banking supervision,and provide theoretical basis and empirical facts for macro-policy design that guide enterprises and governments to reduce debt risk.