The Study Of Corporate Bonds Financing

In the past decades, China's financial system has experienced profound changes, where corporate bond market has made its debut by providing not only a market mechanism to implement fiscal and monetary policies, but also an alternative financing channel for state-owned enterprises(SOEs) and state infrastructure projects. The China corporate bond market provides an infrastructure for the soundness of SOEs' corporate governance, and also, has become a necessitating part of China financial market system.Nevertheless, the market of corporate bonds is still, by far, less developed than those of stocks, treasury bonds and financial bonds in China. Much effort is desired to improve market liquidity, product variety, risk management and market opening-up for the benefit of bond issuers as well as investors in the country.There are several reasons for the growth lag of corporate bond market in China. On the one hand, it is related about China's national policy-oriented and the imperfect of financial system. There is a strict monitoring system in issuing corporate bonds in China. Only a handful of large SOEs can issue corporate bonds if meeting certain conditions. Moreover, the use of raised funds by issuing corporate bonds is generally limited to the fixed assets of building projects and technology upgrading in Enterprises. China's financial system is lack of effective risk-control mechanism and a sound system of credit rating that also restrict the development of corporate bond market. On the other hand, it is also a very important reason that owe are lack of understanding of corporate bond financing functions. We have just seen corporate bonds as a financing tool of enterprises. We are not fully aware of its positive role of improving the corporate governance structure and enhancing the market value. This is bound to affect our judgment of value of corporate bond market and our behavior of participation in the corporate bond market.Firstly it introduces the background of the topic and the significance in the introduction of this paper. Then, to against the view of corporate bonds that are often equated with enterprise' bonds, this paper analyses differences and contact between the two concepts, and points out the study object of this article. In the second part of this paper, it introduces the main theory of corporate bond financing and the literature and the research status. In the third part of this paper, it makes a more in-depth study of the theory of corporate bond financing. Firstly, it makes a comparative study between debt financing and equity financing. Secondly, it makes a comparative study between bank loans and corporate financing. Finally, it makes a result that there are a number of advantages of corporate bond financing. In the fourth part of this paper, it studies the functions of corporate bond financing. It studies the functions of improving the corporate governance structure and enhancing the market value. It thinks that corporate bond financing can play a positive role in these two areas, and makes empirical analysis combined with the status quo of enterprises financing in China. There is a certain deviation between financing order in china and the pecking order theory. Enterprises still do not have enough attention on the role of improving the corporate governance structure and enhancing the market value that corporate bond financing plays. In the fifth part of this paper, it makes a study of the development of corporate bond market. Firstly, it studies the development of corporate bond market in America. Its corporate bond market is the largest in global and it has the best liquidity. So, making a study of it will be an important reference to develop our corporate bond market. Then, this paper studies the development of corporate bond market in China. From 1980s, it experienced six stages of development, following by sprout, expansion, rectifying, monitoring, norms and new. Present, the market is being ushered in a favorable opportunity to develop. Then, the article studies the status quo of the development and problems of the market in China. Finally, it makes six proposals to vigorously develop China's corporate bond market in the end of this paper.