Does Financial Liberation Reduce Financing Constraints

Financial liberalization theory originated in the 1970s,and was created in the background of many developing countries were seeking alternatives for economic development.Xiao and McKinnon carried out in-depth research based on the actual situation of developing countries at the time,and put forward the theory.China introduced a market economy and financial system in the 1980s,with the aim of enhancing the effectiveness of the financial system and making the financial services more effective in economic development.The 18th National Congress of the Communist Party of China proposed to deepen the financial system reform,support the real economy,accelerate the development of multi-level capital market,promote the interest rate and exchange rate marketization,and gradually realize convertibility of RMB capital account.While the enterprise is the most important micro foundation of the whole economic development,reasonable financing can reduce the cost of using capital,improve the efficiency of capital operation and realize the effective allocation of resources.Therefore,it is significant to study the impact of financial marketization on corporate financing constraints from both theoretical and empirical perspectives and this will help enterprises to improve the understanding and use of policies to seize the opportunity to reform to enhance their own value.This paper studies whether the increase of financial liberalization eases corporate financing constraints.In this paper,a series of 1661 companies listed in Shanghai and Shenzhen stock markets before 2008 were selected as the candidate study samples,and the financial liberalization process index was constructed from financial market reform big events from 1996 to 2015,FHP model,-Investment-cash flow model was to be constracted to study the effect of financial liberalization on corporate financing constraints,the following conclusions can be drawn through empirical verification:Firstly,China’s listed companies,regardless of their property rights,are faced with varying degrees of financial constraints;after introduction of the cross-variable financial liberalization level,the crossover coefficient FCF/A is significantly positive at the level of 1%,which shows that with the increase of financial liberalization in China,all the financing constraints of listed companies have been alleviated.Secondly,if the nature of property rights is considered,the financing constraints faced by state-owned and non-state-owned listed companies are significantly different.The level of financing constraint faced by non-state enterprises is obviously higher than that of state-owned enterprises,indicating that under the special institutional arrangement in our country,the nature of the property right is an important factor influencing the financial constraints of Chinese listed companies.After the introduction of cross-variable financial liberalization,the cross-regression coefficient of state-owned enterprises(1.846)is significantly smaller than that of non-state owned enterprises(11.54),which is significant at the level of 1%.This shows that with the increase of financial liberalization,the cash-cash sensitivity of non-state-owned listed companies will be weakened compared with state-owned listed companies.