A Study On The Characteristics And Effect Of Entrusted Loans Between Affiliated Confirms

Wrongly distributed capital is a quite serious and negative situation emerging out in today capital market as a result of long-term fiscal control and unbalanced credit rationing. Against this phenomenon, meanwhile the private activities of adjusting capital start to be active. Entrust loan is one of the shortcuts, enterprises with abundant capital will loan other ones lack of capital to achieve the ambitions of high interests and supporting weak sides. This essay will by some specific cases analyses entrust loan trading commonly engaged by China’s listed companies, finding out the resources of entrust loan and large scale of capital, observing how entrust loan is functioning, on the case of Tianwei baobian’s corporation, we discover many reasons for entrust loan include new business development, lowing financial cost, adjusting company management form. Capital channels have China’s financial market’s commonly-used ways, like allotment of shares, issument of bonds, at last, a conclusion is drawed that for the company who receives the trust credit indeed benefit himself and get back on the track when confronted the capital shortage. And entrusted loan can reduce the financing cost of group company,but is less useful to subcompany who take the loan. Listed companie take the advantage of attracting capital to infuse holding companies in great need, by which way the latter lives through difficulties and decrease financing cost.