Macroeconomic Policy, Equity Nature And Credit Capital Allocation

With respect to the great achievements of market-oriented reform of the financial markets during the past 35 years, what about the market-oriented allocation of credit capital in the banking market? The resolution of the Third Plenary Session of the Eighteen concerning financial reform points out:it will let market forces play a decisive role in allocating resources and make financial market better serve the real economy. As a country relies mainly on the source of direct financing, therefore it is critical important to optimize the allocation of credit capital.Existing literature pays much more attention on equity nature discrimination in the allocation of credit capital, but only few researches analyze how much the proportion of equity nature discrimination is. Few researchers quantify the effect of various factors have on the allocation of credit capital, especially the role of monetary policy, industrial policy. Also some researches are limited by the incomplete samples.For that reason, this paper analyzes equity nature discrimination of allocation of credit capital, and tries to improve the capacity of sample, research methods and research framework.This article studies the extent of equity nature discrimination and what effect various factors have on the difference of credit capital allocation by the method of the convergence of OLS regression, the panel regression models and Blinder-Oaxaca decomposition respectively, based on annual firm-level surveys from 1998-2009 conducted by China’s National Bureau of Statistics (NBS), which include the universe of Chinese industrial firms (manufacturing, mining, and construction) with sales over 5 million RMB, also based on the data from Wind Info, which include the listed company from 2008-2012. Meanwhile this paper gives a glimpse of what role of the monetary policy and industrial policy play in the allocation of credit capital, testing whether industrial policy and monetary policy have credit transmission channel?We find that there is an obvious difference in credit capital distribution between the state-owned enterprises and domestic private enterprises. Equity nature discrimination does exist in the difference of credit capital distribution between them with the proportion of about 20%. And the equity nature discrimination faced by non-listed companies is more severe than listed companies with the proportion of about 10%. Tight monetary policy will reduce the overall credit capital allocation and domestic private enterprises get relatively more credit capital than the state-owned enterprises, which confirms the monetary policy’s transmission in the form of micro-foundation. Also state-sponsored industrial policy will increase the industry’s overall credit capital allocation, but the private sector have fewer credit capital relative to the state-owned enterprises, confirming the industrial policy transmission in the microscopic form.These all confirm that industrial policy and monetary policy have credit transmission channel. Meanwhile, this analysis finds that the dominant factors which can explain the average credit capital allocation difference between state-owned enterprises and domestic private enterprises are scale, return on sales, long-term solvency and short-term solvency, which differs between listed companies and non-listed companies.