Corporate Bonds: Investment Demand Or Alternative Financing

Corporate bond financing is one of the important channels for direct financingand a major component of the capital markets. In China, the development of corporatebond falls behind equity financing, government bonds and other financing means.because of the constraints of economic environment and system. In recent years,China starts to emphasize the importance of corporate bond’s development, and onAugust14,2007,the official China Securities Regulatory Commission promulgatedthe “Experimental approach of corporate bonds issued”(referred to as the“Experimental approach”),which creates a new chance for the development ofcorporate bond。However, there is still a long way to go for China corporate bond.In this paper, on the basis of previous foreign and domestic studies, firstly,concepts related with corporate bonds are introduced and defined,the corporate bondof China is actually issued since the promulgation of “Experimental approach ofcorporate bonds issued”which this paper studies about; secondly, use charts and textto introduce the development of corporate bond after the promulgation of“Experimental approach of corporate bonds issued”,then elaborate the demand offixed assets and current assets investment of corporate bond, introduce the advantageof corporate bond financing compared with bank loans and equity financing at thesame time, and give a further explanation that why enterprises choose corporate bondfinancing. Empirical analysis of the effect of corporate bond issuance on fixed assetand bank loans is done to verify the assumptions. Finally, based on the empiricalresearch results as well as possible problems in the process of China’s corporate bondfinancing, make suggestions for regulation on the use of corporate bonds and futuredevelopment of corporate bonds to promote our corporate bond market toward morehealthy direction.