Research On The Internal Capital Market Operation And Its Efficiency In Privately-Run Business Group

The capital market in China, of which is an emerging market country, is at its beginning stage. For the development of enterprises, financing is a bottleneck. Private economic system is one of China’s special economic forms, and is also an important supporting power for the construction and development of our country’s socialist market economy. The stable improvement of national comprehensive strength is related to this key problem. It’s hard for private enterprises to financing from the external capital market. So establishing the internal capital market (ICM) in the enterprise groups to allocate recourses is becoming an important push factor for the development of China’s private enterprise group. The enterprise group has turned into one of the common organizational forms in China. In recent years, more and more enterprises begin to implement diversification strategy in our country. Researchers have focused on the operation and efficiency of ICM, which can allocate resources and enhance the enterprise value, in business groups. This article exactly begins with the particular case of the private economic system in our country, and then the author builds the relevant theoretical basis, using the normative research technique to summarize the existing research results at home and abroad. In the paper, the author mainly researches on construction of ICM and effects based on the ICM in Fosun Group, one of the largest private conglomerates. In the end, the author not only properly draws conclusions including the operation of ICM and its efficiency but also puts forward some useful suggestions.This paper includes five parts:The first part is a brief introduction of the background, significance, research methods, research ideas and the frame work. It illustrates the main contribution and deficiencies of this article.The second part is the literature review. Both domestic and foreign related research results of experts in the field are reviewed. This part summarizes the content as follow:how the concept of ICM was put forward and why ICM was formed; what the relationship between internal and external capital markets is and how does ICM operate; what the function of ICM is; what the efficiency and influence factors of the efficiency of ICM are.The third part of this article is about the related theory. This part states the relevant concepts, including the definition, the boundary and the function of ICM. It also illustrates the applied theory of the efficiency of ICM.The fourth part is a case study. This part analyzes the background of Fosun Group, and its experience of the construction of ICM. Besides, the operational aspect, efficiency, and influence factors of ICM are explained.The fifth part summarizes the whole paper briefly and puts forward some practical suggestions on promoting the efficiency of ICM in private enterprise group.The main contribution of the thesis is to analyze the operation and efficiency of ICM in private business group of China based on the case of Fosun Group.However, due to the information disclosure system in China is not perfect yet, it’s hard to get the financial data about the unlisted members of the companies. So the conclusion may be biased.