| In recent years,under the circumstances of tight macro-control by the government and tight funding for enterprises,some cash-rich listed companies began to lend surplus funds to cash-starved companies through entrusted loans.Tight capital supply chain,financing difficulties of small and medium-sized enterprises,weak regulation caused by vague definition of nature,and the profit-driven nature of listed enterprises for capital,China has formed a unique phenomenon of entrusted loans.As a unique phenomenon in China,the emergence of entrusted loans has a great deal to do with the Chinese system.Entrusted loans have been popular in recent decades,especially after China’s economic growth slowed down.It means that the emergence of entrusted loans has much to do with China’s current economic development background.Based on this,"what are the driving factors for an increasing number of enterprises to engage in such financial business as entrusted loans?" has become a question worthy of in-depth discussion.In this paper,related research is carried out from the two dimensions of"time and space" and the two perspectives of "internal factors and external factors of enterprises".There is no doubt that there are various reasons for enterprises to issue entrusted loans.It is unrealistic to try to enumerate all the factors affecting the granting of entrusted loans by theoretical models and empirical methods.The starting point of this study is consistent with the starting point of two economic reform measures with the current background,namely,"supply-side reform" and "real estate reform",which are intended to solve the drawbacks of the financial market and real estate market.Starting from the internal and external factors of "production efficiency of real economy" and"high housing price",this paper reveals the causes of enterprises’ entrusted loans.In the context of the new normal of economic development,in-depth analysis of the impact mechanism of enterprises’ production efficiency on entrusted loans has important enlightenment significance for exploring the benign interaction,integration and symbiosis between national industrial policies and enterprises.The study on the effect mechanism of housing price on entrusted loan has important policy implications for China’s real estate market price regulation and strengthening informal financial supervision.For one thing,the supply-side structural reform focuses on the improvement of total factor productivity（TFP）to promote economic growth.The reduction of excess production capacity（or the improvement of the capacity utilization（CU））is the top one out of five main tasks of the supply-side structural reform.Financial reform,as the top priority of supply-side structural reform,plays a fundamental role in promoting structural adjustment of the real economy and serving the transformation and upgrading of the real economy.However,China’s current economic development is confronted with the imbalance between the financial sector and the real economy.A large amount of financial capital has not entered the real economy but circulated or idled in the financial system.This is because non-financial enterprises’ preference for financialization reduces their investment in main business,when the "crowding out"effect of financialization is greater than the "reservoir" effect.For example,with tight government macro-control and tight corporate funds,some cash-rich listed companies lend their surplus funds to financial-constrained companies through entrusted loans in recent years.The cash flow obtained by the enterprise through operating activities and financing activities is used for both main business investment and financial investment.The firms with low TFP and low CU are less profitable from their main business and,in other words,have lower opportunity cost in issuing entrusted loans.This paper shows that TFP and CU are important determinants of the issuance of entrusted loans,and enterprises with low TFP and CU have greater incentives to issue entrusted loans.As the top priority of supply-side structural reform,financial reform plays a fundamental role in promoting structural adjustment of the real economy and serving its transformation and upgrading.However,at present,China’s economic development is facing the imbalance between the financial sector and the real economy,and a large amount of financial capital does not enter the real economy but circulates or idled in the financial system.This is because,when the "crowding out" effect of financialization is greater than the "reservoir" effect,financialization of non-financial enterprises is bound to reduce their investment in the main business.In recent years,under the circumstances of tight macro-control by the government and capital shortage of enterprises,some listed enterprises with abundant cash began to lend surplus funds to enterprises in short of funds through entrusted loans.Enterprises invest in main business and finance based on the cash flow obtained from operating activities and financing activities.Those enterprises with low total factor productivity and capacity utilization ratio are obviously less able to make profits by relying on main business and have lower opportunity cost of entrusting loans.Second,the implicit government support originated from the "land finance" and real estate remains a buyer’s market originated from the property of rigid demand for housing brought rich profits to the real estate developers and investors.Therefore,a large amount of money flowed into the real estate market,pushing up the real estate price.The increase in operating costs caused by rising housing prices has seriously eroded corporate profits.In a world where cash is king,companies are reluctant to invest for the long term with debt.If they have money on hand,companies are more willing to make shorter-term investments,putting their money in assets that are easier to sell than businesses that are illiquid and hard to pull out of.As China’s economy enters a new normal,especially in regions where real estate investment reduces the efficiency of resource allocation and has a relatively obvious crowding out effect on the resources of other real economy industries,many non-financial enterprises obviously show a tendency and enthusiasm to engage in "quasi-financial investment business".The specific process of this paper is as follows:First,this paper uses theoretical models and empirical tests to investigate the relationship between total factor productivity,capacity utilization and the issuance of entrusted loans.This paper first constructs a theoretical model to explore how enterprises with different total factor productivity and capacity utilization levels choose the optimal amount of entrusted loans when facing given physical capital and financial capital.In this model,the amount of entrusted loans is expressed as a function of its total factor productivity and capacity utilization.The income of financial investment is divided into interest income based on speculation motive and "value-added income" based on investment purpose.The conclusion of the model is that the amount of entrusted loans issued by enterprises is a monotonously.decreasing function of total factor productivity and capacity utilization of enterprises,no matter whether it is purely driven by financial profits or real economic investments of the firm.In addition,with a manually collected dataset of A-share listed companies from the Shanghai and Shenzhen stock market that issued entrust loans from 2007 to 2015,this paper investigates the relationship between total factor productivity,capacity utilization rate and enterprise’s financial resource allocation.Empirical results show that after controlling for other firm characteristics that are related to the entrusted loan issuance,the firms with lower total factor productivity and capacity utilization are more likely to issue and issue more entrusted loans,which suggests that such firms are more likely to engage in financial business activities.Further analysis shows that the relationship is more pronounced when the borrowing and lending firms are related party and when the lending firm has political connections.Second,using the entrusted loan announcement data issued by listed companies in Shanghai and Shenzhen A-share stock market and housing price data at various prefectural level from 2007 to 2015,this paper conducts an empirical test on the relationship between the probability,quantity and price of entrusted loans issued by enterprises and the housing price in the place where the loan enterprise is located.The results show that the higher the housing price,the higher the probability,the more the quantity and the lower the price of the entrusted loans.Both endogeneity test and robustness test ensure the existence of this causal relationship.In addition,this paper further analyzes several transmission mechanisms of how the housing price affects the entrusted loan behavior of enterprises.First,mediation mechanism analysis shows such a causal channel:"house price rise->returns on corporate equity fall->more entrusted loans issued".Second,companies with more investment property assets issues more entrusted loans,and more of the entrusted loans goes to real estate companies during the run-up in house prices.Third,the extent to which companies issue entrusted loans is affected by housing prices will also be affected by the characteristics of corporate governance institutions.For enterprises with high ownership concentration and enterprises with adventurous management,the causal relationship is stronger.In this paper,two main groups of relationships were discussed:the relationship between total factor productivity,capacity utilization and the probability and quantity of entrustment loans issued by enterprises,the relationship between house prices and the probability,quantity and interest rates of entrusted loans.In view of these two groups of relations,this paper gives a detailed theoretical analysis and concrete empirical test,and carries out endogeneity analysis,and does a lot of robustness tests to ensure the accuracy of the results.Through these two groups of relations,this paper finds out the internal and external core factors that drive enterprises to engage in financial business activities of entrusted loans.To sum up,from the perspective of internal factors,entrusted loans issued by enterprises may not only be caused by speculative motives of enterprises,but also a rational choice of enterprises.Therefore,the emergence of entrusted loans should be viewed in two aspects.From the perspective of external factors,the excessively rapid growth and high housing price increase the operating burden of enterprises,resulting in the distortion of resource allocation in the industrial investment and financial investment of non-financial enterprises.The corresponding policy implications are thus revealed as follows:as for the entrusted loan enterprises themselves,government should not only guide the flow direction of entrusted loans but also strictly supervise the motives of entrusted loans.At the same time,the government should increase supports for the real economy.For the external environment of entrusted loan enterprises,the most critical thing is to continue to deepen the reform of the financial system.At the same time,the government should control the speculative demand for real estate,control the capital scale of the real estate market,prevent the further rise of the real estate price,and let the real estate market develop healthily. |
