The Analysis On The Existence And Influence Factors Of Internal Capital Market Among Enterprises

In China, the theorists have not yet paid enough attention to the internal capital market research. However, during the process from a planned economy to market economy in China, there are some serious problems of information and incentives between the imperfect external capital markets and enterprises, so the internal capital market formation has being inevitable now.Based on the studies about the capital allocation process of Group’s internal capital markets, this paper makes up for the lack of current theoretical research on enterprise groups; the paper expands the theory applicability of Group’s internal capital market and demonstrates the insufficient of company investment and credit rationing due to the asymmetric information and agency problems which can be mitigated by project financing of a subsidiary or segment of the internal capital market. The paper claims that ensure the internal capital market is a better capital allocation mechanism for Group’s good bilateral benefit arrangements. The paper analyses and appraises the relationship between the information costs, enterprises scale and decision-making efficiency by relaxing assumptions of adequate and affordable information. Besides, the author proposes to reduce the information cost and information distortion by improving the management mechanisms and technical means so as to improve decision-making efficiency of enterprises.This article elaborates the reason for the existence of internal capital markets from the national level, market level and enterprise level, giving a detailed reality description of the internal capital market performance and analyses the impact efficiency of the internal capital market factors and tests the internal capital market conglomerate existence and efficiency empirically by Family Business samples. And on this basis, this paper further examines the impact of internal capital allocation efficiency led by the nature of equity, corporate control characteristics and mode of operation of the internal capital market and other factors, which has an important theoretical and practical significance for China’s economy during the transition period.