The Impact Of Interest Rates On The Capital Structure Of Listed Companies In China

Chinese steel industry has got an unprecedented development, and the production and quality have been improved substantially since Chinese reform and opening-up. At the same time, there is a series of problems existed in our national steel industry such as productivity surplus in low-end steel, deficient development in high-end steel, great energy consumption, serious environmental pollution and so on. Positively transforming the mode of development and carrying out transformation upgrading will be an efficient way of sustainable development for our national steel industry. As a capital intensive industry, steel industry needs more financial support to accomplish transformation and upgrading. How to effectively choose financing methods and capital ratio will be the focus of our financing decisions. Effective capital structure can not only reduce the cost of average capital but also keep the enterprises away from the credit risk and financial risk, and improve enterprises’market value. Therefore, this paper select25samples of companies listed before2002(excluding ST, PT companies) as the representatives of listed companies in our national steel industry.At the beginning of this article, it reviews and summarizes some relevant theories and researches. Through the existing studies, we have found most of these researches study from the internal factors of companies, and few of them study the influence of macroeconomic factors on the capital structure. In market economy system, the macroeconomic fluctuation has greater and greater influence on the market participates. As a strong cyclical industry, it is more sensitive to the periodical changes of macro economy. As the reform of interest rates liberalization promotes, adjustment of interest rates will become increasingly frequent, and its influence on macro economy will be more far-reaching as well. Therefore, this paper chooses interest rate which is a macroeconomic indicator to discuss and analyze its influence on the capital structure. This paper is divided into six parts, followed by progressive commenced, in-depth study of the impact of interest rates on the capital structure of listed companies of China’s iron and steel industry.The first part is an introduction part of this paper, elaborate research background and significance of the topic of this article.The second part is the analysis review of relevant literature and research results of this paper involved, by combing these documents, found that fewer scholars for the study of the relationship of the interest rate and the capital structure of the steel industry. And I believe that is very necessary to study the rates of macro factors listed companies in Chinese iron and steel industry in the moment.The third chapter is the theoretical bases such as the definition of capital structure and interest rate. It illustrates the relevant theories of capital structure and interest rate. Finally, it introduces the theoretical principles of the influence of interest rates on the capital structure.The fourth chapter analyses the development status of the entire steelindustry and capital structure of our listed steel industry, and then introduces the financing channels, financial leverage, and interest rate policy in China.The fifth chapter is the empirical analysis. On the basis of determined research samples, we make a selection of variables and study the hypothesis. We explain the influence of total debt ratio and the ratio of the current liabilities by choosing short-term interest rate and real long-term interest rates, as independent variables and enterprise scale, profitability, the value of pledge of movables and growth rate as controlled variables. We make a standardized process and descriptive statistic analysis of the sample data. And then we use Panel Data to do stepwise regression analysis.The sixth chapter is the conclusion, countermeasures and suggestions. It summarizes the above study, makes a conclusion and puts forward corresponding countermeasures and suggestions. It also brings forth the innovative ideas and the deficiency of this paper.On the basis of referencing and summarizing the existing research, this paper makes a selection of25listed steel companies as research samples, taking interest rates as one of the variable indicators which are reflecting the macro economy. Through setting up panel data model and makes corresponding conclusions. It is a guiding significance to the perfection of the capital structure.But due to limited time and the limitation of knowledge, there are still some deficiency in this paper such as short of sample data, lack of deep study of stock rights financing, no dynamic study and so on. We hope to make further progress in future research.