Study On The Effect Of Debt Financing, The Bank-enterprise Relationship Of Over-investment In State-owned Enterprises

Since the12th Five-Year Plan, our country has to speed up the transformation ofeconomic development mode, in order to maintain long-term stable development of theeconomy, improve the efficient allocation of resources. This is to promote social harmonyand stability of China’s economic development. State-owned enterprises is an importantdriving force to promote the modernization of the State, to protect the common interests ofthe people. The Third Plenary Session of18th Central Committee mentioned to furtherdeepen the reform of state-owned enterprises, state-owned enterprises must adapt to themarket and international new situation to play a leading role to optimize the allocation ofsocial resources, in order to maintain the national economy long-term sustainabledevelopment. Currently, because China’s securities market is refinancing functions arerestricted certain macro and micro factors, debt financing has become the main financingchannels listed companies and bank loans is a major component of debt financing of listedcompanies. In the background that China’s banking industry is under a long-termmonopoly of The five major state-owned banks，the allocation of credit funds are greatlyaffected by the policy. With the pace of the domestic financial market liberalizationaccelerating，the deepening reform of bank is more and more urgent. Banks should be ableto adapt to the development of credit markets, to strengthen their ability to control risk andimprove efficiency in the use of credit funds. Only in this way, banks have the corecompetitiveness in the open financial markets and will not be out of the market. So studyon the influence of relationship between banks and companies in China, bank debtfinancing on corporate over investment is of great significance to the sustainabledevelopment of banks and enterprises.This article is based on the bank debt financing and the bank-enterprise relationship.The annual reports of our A-shares’ state-owned listed company from2010to2012havebeen used as samples. Regression analysis was used to test the relevance among thebank-enterprise relationship, bank debt financing and over-investment of state-ownedenterprises. The study found that inefficiency investment and over-investment problemshad generally existed among state-owned listed enterprises; some companies suffered quiteseriously. Bank debt financing has significantly affected the over-investment ofstate-owned listed enterprises so that bank loan can aggravate the over-investment problem.Bank-enterprise relationship also has a significant effect on over-investment problem, that is compact relationship can lead to more severe over-investment problem. Meanwhile, theeffect of debt financing of state-owned listed enterprises with bank-enterprise relationshipon over-investment problem is more than those without bank-enterprise relationship. It isconcluded that bank-enterprise relationship can intensify the degree of over-investment inbank loan of state-owned listed enterprises.