A Study On Digital Finance,Corporate Leverage And Debt Default Risk

At present,facing severe and complex domestic and international environment,China is in the critical period of "supply-side structural reform".Overcapacity,high debt and corporate defaults occur frequently.While the COVID-19 pandemic has continued to have a negative impact,it has also boosted the development of the digital economy.Based on this realistic background,this paper conducts theoretical and empirical analysis on the influence of digital finance development on corporate leverage ratio and debt default risk.Based on the literature review and theoretical analysis of digital finance,corporate leverage ratio and debt default risk,this paper summarized their current development and characteristics.In the empirical analysis,using Chinese A-share listed companies and Peking University Digital Financial Inclusion Index from 2011 to 2018,two fixed effect model,intermediary effect model,instrumental variable method and difference in difference method are used to empirically analyze the mechanism of digital financial development in reducing corporate leverage ratio and debt default risk.The conclusions are:first,digital financial development can significantly reduce corporate leverage by alleviating financial distress,increasing financial availability and reducing resource misallocation.Moreover,the effect of long-term leverage ratio is significantly stronger than short-term leverage ratio,and the effect of current liabilities and leverage ratio of enterprises in eastern China is more significant.Second,there are significant differences between digital finance and traditional financial development in the impact of corporate leverage ratio.The increase in the proportion of traditional long-term credit will significantly increase the leverage ratio of enterprises,and at the same time increase the risk of debt default of enterprises,while the development of digital finance is conducive to reducing the leverage ratio of enterprises,and the impact on the risk of debt default is not obvious.Third,the development of digital finance has significantly reduced the debt default risk of listed companies,and its mechanism is mainly to ease financing constraints and improve investment efficiency.At the same time,default risk can be reduced by reducing corporate leverage.In addition,digital finance will increase the density of banks in the cities where enterprises are located and the degree of bank competition,which is conducive to increasing the financial accessibility of enterprises and thus reducing their debt default risk.The conclusions of this paper provide empirical evidence for the development of digital finance to promote enterprise deleveraging and reduce debt default risk.Based on this,this paper proposes that digital finance has the economic effect of reducing enterprise leverage ratio and debt default risk and it will have a substitution effect on the traditional bank credit,promote the industry competition and improve the market efficiency.Therefore,the development of digital finance ’should be vigorously promoted and the deleveraging policies of enterprises should be implemented in a differentiated manner to avoid the possible outbreak of debt default.