The Debt Concentration

After the reform and opening up, China’s corporate financing and capital structuresignificant changes which showing a trend of diversification with the gradual deepeningof the market economy. However, the proportion of bank loans in corporate finance isstill as high as70%, which indicates that our corporate finance structure is heavilydependent on bank loans. So it is with great significance to study of bank lendingpolicies for enterprises. Traditional studies of bank lending always suppose that thebanks decides the lending policies are banks, the corporates are not considered.Referring to foreign study, we think that the enterprises make autonomous choices forselecting a single bank or a wide range of bank loans according to its own project, assetcondition, operating conditions as well as bank-enterprise relationship status and otherinformation. This option is defined as debt concentration for enterprises, which is thebank debt structure.According to our data that listed companies in China debt concentration isgenerally high. From the year2000to2010, the average ratio of the company who hasonly one bank relationship is56.58%, which means that China’s listed companiesmainly rely on a single bank relationship. However, the debt concentration of CCImarkedly decreased from97.36%in2000to86.34percent in2010, and the averagenumber of banking relationships has increased from1.22in2000to2.57in2010. Thisshows that China’s listed companies began to diversify sources of bank borrowings.This paper first introduces the background and significance of this study, thencombed the existing literature. Than we study on the basis of existing foreign theory. Byanalyzing the status of the concentration of bank borrowings of the listed companies inChina, combined with China credit market characteristics, bank relationshipcharacteristics we build our model. We test the factors influencing the bank borrowingsof the listed companies in China empirically. Our results indicate that the larger, thehigher leveraged, profitable companies have lower debt concentration. High ownershipstructure means high level of debt concentration. The state-controlled enterprises havehigher concentration then the non-state-owned holding enterprises, and it is alsodifferent the factors who influence the concentration.