| In recent years,local governments have proactively promulgated policies to develop regional financial centers,and have established local financial management institutions such as the Financial Office to strengthen financial management in their jurisdictions and promote local financial development,innovation and experimentation.Many provinces have put forward the requirements to build regional financial centers,and tried to establish a local government financial holding group(hereinafter referred to as "LFHG")to ensure the development of the local economy.The development and growth of local financial control groups can bring at least the following benefits to local governments: First,improve the government's competitive advantage.Second,reduce the fiscal pressure on local governments.Finally,make local financial resources bigger and stronger.However,while local governments are racing to promote the development of local financial holding groups in order to promote economic growth,there are also serious financial risks.LFHGs are the latest form of financial control of local governments.On the one hand,they have the characteristics of a general financial mixed-business enterprise.On the other hand,the local government background determines that they have special risk characteristics and decentralized financial power in China's transition.It is closely related to the phenomenon of economic transformation.In addition to the risk transfer behavior of traditional financial holding groups,what is more important is the complex ownership control and related transactions between LFHGs and local state-owned enterprises,as well as the special risks caused by the blind financial expansion of local governments.It is specifically derived from the bad state assets and high liabilities of local state-owned enterprises caused by the imbalance of industrial structure and excess capacity during the process of industrialization in China.During the process of urbanization,local financial holding groups have undertaken too many public municipal construction projects,resulting in lower investment efficiency.And local governments intervene affiliated bank loans through LFHG's and could cause serious risks.How to understand the rapid development of LFHGs and the resulting financial risks,and how to build a financial supervision system to prevent risks,we urgently need to conduct in-depth research in both theoretical and practical aspects.Compared with market transactions,related party transactions have the characteristics of complex transaction entities,diversified transaction methods,and poor transparency of transaction information.They are often a means of transferring benefits between the company and the controlling shareholder or the company's own earnings management.In addition to the multi-level pyramid structure of general corporate groups,LFHGs also have the attributes of local government and finance,which makes their connected transaction characteristics more complicated.In the search scope of this article,the literature of LFHGs is relatively scarce.There is almost no literature that specifically discusses related transactions and risks of LFHGs.Theoretical and empirical literature is very scarce.Based on this,this article chooses to study the relationship between it and the risks of LFHGs from the perspective of connected transactions.The basic logic of this article is as follows: As an important issue in academic research and practical management,intra-group risk contagion caused by related party transactions has attracted widespread attention and discussion from scholars.However,the risks of related party transactions are not limited to the risk correlation and contagion between subsidiaries caused by mutual transactions,but also cause the internal resources of the group to flow and re-allocate between parent and subsidiary companies and subsidiaries at different levels.Although this internal resource allocation does not directly affect the results of the consolidated statements,it will cause the transfer of internal revenues and responsibilities of the group,which in turn affects the risk exposure level of the subsidiaries and the group as a whole.In addition,the economic endowment of local financial control in the region where the local financial control is located determines its strategic positioning and functional positioning are also different,so the risk of related party transactions should be heterogeneous and cannot be generalized.Based on this,this article first sorts out the development history and current situation of the local financial group,so that readers can intuitively understand the development reality of the local financial group.Secondly,this article studies the risks arising from related guarantees,related loans and related loans from affiliated banks.These three types of related-party transactions are non-recurring related-party transactions,but their frequency and proportion are relatively high.They are important channels for the transfer of benefits between related companies.They can have a significant impact on the company's earnings and investment and financing plans.The study of transactions is of great value.Aiming at the risk characteristics exhibited by related party transactions,the last part of this article discusses the prevention and resolution of local financial risks.As the local financial control group is an important form of financial assets of the local government,this article further extends risk prevention and mitigation to the local financial level.Not only discusses the conflict between local financial development and risk prevention,but also builds theoretical models to solve central-local incentives.Compatible risk sharing mechanisms.The main points and conclusions are as follows:1.LFHGs have multiple classifications.It has the dual goals of integrating local financial resources and supporting the development of the real economy,and are a new form of competition among local governments.According to the industry classification of the Securities and Futures Commission,the LFHGs that are comprehensive have the highest proportion.This is because in the equity reform of local financial institutions,local governments often assign the equity of financial institutions directly held by local financial bureaus to comprehensive state-owned enterprise groups to achieve the goal of combining production and finance and improving economic development.The second is the financial industry,which is the result of local governments integrating financial resources and creating regional financial synergies.The remaining types of industries with a relatively high proportion also include pillar industries in various regions such as commerce,construction,manufacturing,and transportation,which are consistent with the responsibility of local financial control groups to drive regional economic growth According to the degree of integration of financial assets and industrial assets,LFHGs can be divided into purely financial types such as Ping An of China and Shanxi Financial Holdings,finance-oriented such as CITIC Group and Everbright Group,and industrial integration such as Guangzhou Yuexiu Group and industrialoriented types Zhejiang International Trade.2.The development and status quo of the LFHG has the following characteristics: First,assets and liabilities have grown rapidly year by year.As of2016,the average asset value exceeded 1 billion yuan,and it is a significant group enterprise in various regions.Second,debt accounts for a relatively large proportion of assets,and there is a risk of relying on leverage to operate.Third,from the administrative level,the number of local financial controls controlled by provincial governments is much higher than that of non-provincial levels.Fourth,the overall geographical distribution of local financial controls is inextricably linked to regional positioning and the distribution of financial resources.Beijing,Shanghai,and Guangzhou have more direct financial licenses,while Jiangsu,Shandong,and Zhejiang have more indirect financial licenses.3.The related guarantee is positively related to the possibility of LFHGs' overleverage,that is,the higher the proportion of local related guarantees in the local financial control,the more severe the excessive debt.This is because the group-type development model of local financial control makes it easy to obtain connected guarantees.Under the dual effects of its own financing impulse and banks' preference for secured loans,it is easy to cause excessive debt;The effect of controlling excessive debt levels is even higher.This is because the parent company has more control resources and stronger credit enhancement capabilities.This effect is stronger in local financial controls where the allocation of decision-making power is concentrated in the parent company,and the subsidiaries are less profitable or have higher growth;further research has found that the government and financial attributes of local financial controls also affect Consequences of related guarantees.Specifically,compared with non-provincial LFHGs,in provincial-level LFHGs,there is a stronger positive relationship between connected guarantees and excessive liabilities;compared with local financial controls of non-holding banks,In financial control,the positive relationship between connected guarantees and excessive liabilities is stronger.4.Related borrowing is positively related to the possibility of LFHGs' overinvestment.In other words,the higher the proportion of Related borrowing,the greater the possibility of LFHG's overinvestment.This is because the LFHG does not necessarily follow the principle of maximizing corporate value when selecting investment projects,and it may be to maximize political returns.In addition,the LFHG has a serious agency problem.The use of related borrowing funds is subject to less supervision and constraints,and the budget constraints on borrowing funds are very soft.From the perspectives of relative GDP ranking,the relative importance of local financial control groups,and the replacement of local officials,the characterization of the degree of local government intervention in LFHGs was found.The greater the importance of the local financial control group,and the lower the policy uncertainty caused by the replacement of local officials,the more significant the positive correlation between internally-linked fund borrowing and excessive investment.That is to say,the relationship between the LFHG's related borrowing and excessive investment is regulated by the degree of local government intervention.5.The LFHGs' influence channels on banks' non-performing loan ratio include both direct influence channels of related loans and indirect influence channels of loan concentration.The results show that the impact of the related loans on nonperforming loan ratios of banks is not significant.However,according to the grouping of external financing dependence and financing constraints,it was found that when banks belong to enterprise groups with higher external financing dependence and higher financing constraints,related-party loans have significantly increased the bank's non-performing loan ratio.It can be seen that connected loans do not necessarily represent the hollowing-out behavior of the controlling shareholder.When the group is short of funds and it is difficult to raise funds through other channels,the group will damage the interests of banks through related loans.The concentration of loans has increased the non-performing loan ratio of banks,but the above relationship is affected by the moderating role of regional economic endowments.Specifically,when the ratio of regional industrial economy and regional state-owned economy is high,and the local government's fiscal endowment is poor,the impact of loan concentration on the non-performing loan ratio of commercial banks is more obvious.6.Due to the mismatch between local government fiscal rights and business rights and promotion championship system,the biggest problem in local financial regulation is that the regulation also brings financing needs.According to the model,the budget soft constraint and the flow degree of other production factors are the important factors that affect the financial development and the coordination degree of financial regulation.While hardening budget constraints,increasing the liquidity of other factors is a way to coordinate financial development and financial regulation.Hardening budget constraints will prompt financial institutions to choose high efforts to improve the success rate of financial projects;And improving the liquidity of other factors of production will help to increase the relative marginal value of financial capital and promote financial development.From the perspective of hardening budget constraints,this paper proposes the establishment of a local government financial risk prevention fund.Specifically,the fund amount shall be linked to the number,scale and financial risk exposure of local financial institutions.The establishment of the local financial risk prevention fund is not only the responsibility of the local government,but also the contribution of the financial institution according to its risk degree.Fund verification is subject to supervision by the central bank,but daily operations require market-based operations by local asset management companies.In terms of improving the mobility of factors,this article also gives suggestions in terms of optimizing the institutional environment,promoting talent mobility,and strengthening transportation infrastructure.7.The results of encouraging agents to participate in the model are as follows:if the central government has a relatively high return in the project,centralized supervision should be implemented;If the relative benefit of local government in this project is high,it is necessary to decentralize supervision.If the interests of the local government and the central government are more consistent,it is suitable for decentralized supervision;If the interests of the local government and the central government do not coincide,it is suitable for centralized supervision.The result of the model that motivates the efforts of the principal and agent are as follows: if the interests of the central government and the local government are more consistent,then in order to stimulate the efforts of the local government,centralized supervision of the financial project should be carried out;If the interests of the central government and the local government are not aligned,the financial project should be decentralized in order to stimulate the efforts of the local government.Under centralization,the central government always has an incentive to inform local authorities of the information it receives;Whether local governments inform the central government depends on the coefficient of interest coordination.If the coefficient of interest coordination is high,local governments have incentives to inform the central government;In the case of decentralization,local governments always have an incentive to inform the central government of the information they receive;Whether the central government communicates the information to local governments depends on the coefficient of interest coordination.If the coefficient of interest coordination is high,the central government will also inform the local government of the information.This article mainly has the following innovations: First,based on the equity data of financial institutions,and by tracing the nature of the final controller of the top ten shareholders and the shareholding ratio through the equity relationship,the local financial control groups in various places were determined,and the localities were constructed.Full sample of the Financial Holding Group.Within the scope of the literature searched in this article,the research on the local financial control group is a case study or qualitative analysis.There is no research to determine the full sample of the local financial control group through the method of tracing the shareholders upwards from the financial institution,let alone the local financial control group Empirical research.Secondly,the research on the related party transaction risk in this paper is different from the traditional thinking of risk transfer between different financial institutions within the financial holding group and the emphasis on firewall construction to prevent risks.The inter-flow and reconfiguration will further affect the overall risk-taking level of subsidiaries and groups.The research content of this article puts more emphasis on the risks arising from the transfer of rights and responsibilities and the transfer of resources between different financial companies and industrial companies by local financial control through connected transactions.Thirdly,this article puts more emphasis on the special related transaction risks brought by local government competition,with a novel perspective.Most of the existing literature discusses connected transactions from the perspective of "efficiency view" or "hollow-out view" based on the perspective of corporate finance.This article believes that the economic consequences of local financial control group's related party transactions are not only affected by corporate governance factors,but more importantly by local government competition factors.If you ignore the political characteristics of connected transactions,it will be difficult to fully understand the risks of connected transactions.Finally,based on the theoretical analysis framework of organizational supervisory decentralization,this paper constructs a theoretical model of the central and local hierarchical supervisory system,and proposes supervisory opinions based on the theoretical model.At present,there are existing regulatory decentralization documents that only discuss the division of regulatory authority in terms of issues,not only lacking a theoretical analysis of the optimal risk sharing between the central and local governments,but also mostly emergencies research methods,and lack of practical reform plans. |
PDF Full Text Request