Construction Of Financial Constraint Index And Its Application Based On The Aggregative Index Method

The financing constraint of companies is a hot topic which has attracted a series of researches among the Western academia during the past20years. After the birth of financing constraints theory-as a product of the corporate investment decisions theory-western scholars began to introduce corporate financing factors into the corporate finance investment decision model, and consequently built the investment-finance joint model to study the corporate investment decisions under the financing constraints. They also made a deep investigation into the corporate finance constraint problem, forming the theoretical framework of financing constraints problems.Since the year2008, the difficulties of financing, getting access to loans and making investments in China have become the crucial factors in restricting the development of the companies. Many companies claim their lack of funds, and has difficulties in long-term development."SME closures","private lending" and other words frequently appear in major media, cause a lively discussion of the masses, and also led to the Discussion on financing issues among the business community and academia.From a broad perspective, the financing constraint refers to the case of capital market imperfections, there are differences on the cost on using internal funds and external funding of the companies, so internal and external financing are not fully substitute, as a result investment is lower than most optimizing level, and investment decisions has over-reliance on internal funds. This kind of impact is huge on companies, some serious financing problems might bring fatal damage to the companies. Therefore, we want to study the overall financing constraint of the listed companies in china, and their characteristics and its impact on the companies, and learn from research at home and abroad on the basis of suggestions to further improve the financing environment for Chinese enterprises to enhance the efficiency and effectiveness of corporate finance, and give relevant policy recommendations in order for investors to develop investment plans, for government decision-makers to understand the overall situation of listed companies and provide some reference on the development of policy guidelines.In this thesis, in accordance with the outline of " status description-the issues raised-Literature Review-index construction-Characteristics Analysis-Impact Analysis-conclusions and recommendations," the research began as follows:First, after simple description on the issue of financing constraints, the thesis gives a detailed literature review, by generalizing Western theory of corporate investment decisions, and financing constraints theories, and focusing on how to measure the extent of corporate financing constraints by foreign scholars, we obtained three types of metrics:Metrics of corporate behavior characteristics, comprehensive index metric method and single variable metric method. Metrics of corporate behavioral characteristics used the traditional investment theory of investment-cash flow sensitivity model, cash-cash flow sensitivity model, and used an empirical coefficient model to indirectly reflect the size of corporate financing constraints; Composite Index metric rule comprehensive index metric method is now more commonly used, based on the pre-classification, it constructs a unified financing constraint index by a variety of financing constraints to measure the degree of finance constraints of an integrated corporate, with the method of constructing the model, two ways are commonly used:multivariate discriminant analysis and logistic regression. As the home and foreign countries has significant differences on economic environment and the capital markets, foreign method of financing constraints are difficult to copy in the study of China’s economy, therefore, on the basis of domestic and foreign research, combined with the current specific situation of China’s enterprises, we used a self-built index to measure financial constraints.Second, self-built financing constraints index, this paper used non-financial corporations2009-2012data on Shanghai and Shenzhen A-share market as sample data(sample period is excluded the PT, ST,*ST companies, new listings and retreat companies), and selected a number of indicators reflecting the company ownership structure, company size, cash, solvency, profitability, capacity development, and used logistic regression model to construct a corporate finance model, and test the regression result through Hosmer and Lemeshow test, model fitting test and misjudged matrix test.Third, in order to examine the characteristics and difference of financial constraints, this thesis analyzed China’s listed companies’financing constraints characteristics based on the model that has been established, from the industry, ownership structure, company age, company size, company stock plates to other aspects, in order to fully understand the situation of China’s listed companies financing constraints, and differences of different types of corporate financing constraints.Fourth, in order to study financing constraints and what impact if will has on the enterprise, this thesis added variables that reflect the macro-financial environment (monetary policy and market volatility) to the basic investment model, and through empirical analysis to research the relations of the financing constraints, macro-financial environment and corporate investment decisions.Through analysis above, this thesis has come to the conclusion as follows:First, the issue of financing constraints prevalent in China’s listed companies, almost half of the enterprises are facing financing constraints.2010-2012average probability of China’s listed companies face financing constraints showing a U-shaped features.Second, different companies face different financial constraints①large-scale enterprise has lower financing constraints compared to small-scale enterprises;②age distribution of corporate financing constraints match life-cycle theory, that is, when the enterprise is in " start period-mature period " stage, financing constraints exhibit nonlinear increment situation, financing constraints reaches maximum in mature period, and then begin to decline;③from the industry perspective, the real estate industry, communication and cultural industries, transportation and warehousing industry face a low probability of financing constraints, wholesale and retail trade, agriculture, forestry, animal husbandry, fisheries and manufacturing industry face greater possibility of financing constraints, social services, construction, information technology industries are at an intermediate level;④from GEM to the Main Board of the small plates, the average probability of financial constraints decrements.Third, through analysis of financial condition, the main factors affecting the financing constraints include:cash, profitability, solvency and development capabilities, using these integrated indicators constructed financing constraints index has great reference value. Specifically, the bigger company’s cash inventory, the greater the cash flow generated from operating activities, and the more financial redundancy, the smaller the possibility of corporate financing constraints; companies with higher margins and fast revenue growth have easier access to financing; companies with high flow ratio and strong solvency has lower finance constraint.Fourth, the macro-financial environment has a significant impact on corporate investment decisions, financing constraints can strengthen the relationship between them. Loose monetary policy can stimulate corporate investment, and market volatility and investment showed a positive correlation, indicating that in the immature environment of China’s capital market, companies prefer risk, and corporate facing high financing constraints are more likely to prefer risk.Based on these conclusions, this thesis gave advice to policy makers from the perspective of national macroeconomic policies, financial angle institutions, and companies’own perspective on the issues.First, the government should speed up financial reform to improve the capital market.Second, the government should increase efforts to support SMEs.Third, the Government should actively improve the relevant laws and regulations, establish a sound credit system.Fourth, financial institutions should actively develop small micro-finance, to do business, channels, products and other innovative work.Fifth, in addition to creating the external environment, SMEs also need focus on their ability to self-enhance. They should be prepared to disclose their own information, to form a sound financial system, enhance its value, optimize capital organizations, consider joint ventures, and invest reasonable.