The Effect On Debt Financing Costs By The Financial Ecological Environment And Bank Connection:

Since the reform and opening up,private enterprises as an important part of China's economic development,in all aspects of promoting economic prosperity,stability increasing employment,improving the market system,Promoting the scientific and technological progress of society,etc.have played an important role.However,due to China's national conditions and their own situations,the development of private enterprises is still facing many problems to be solved.Among them,the private enterprises financing difficulties in credit market has been one of the very serious problems.For a long time,compared with state-owned enterprises,private enterprises have been difficult to raise funds from commercial banks that have state-owned background,or have to pay higher costs to raise funds.While many researches are continued in academia,this issue has not been properly addressed.Private enterprises began to seek some other ways,such as establishing a relationship and reputation mechanism called "bank connection",through the hiring of personnel who had worked in the bank as a corporate executive to get more financing.From 2004,after the Governor of People's Bank of China Governor Zhou Xiaochuan proposing the "financial ecology" concept,in which the external financial environment of enterprises and regions began to get people's attention.In private enterprises' financing difficulty environment,it is necessary to examine the following questions:Are the establishment of bank connection in private enterprises and the improvement of the external financial ecological environment can effectively reduce the cost of corporate debt financing?If the reducing of debt financing costs that brings by Bank connection of private enterprises will be affected by the external financial ecological environment?Financial ecological environment is mainly composed of what,whether the merits of the various components will affect the cost of debt financing of private enterprises?There has no systematic research to solve the above problems;therefore,this paper is designed to analyze the problems systematically among the private listed companies.For the structure of the article,the paper has been organized as follows:The first part is the introduction.This section mainly expounded the background,significance of the topic,and on this basis,introduced ideas and research methods,research framework and innovation of this paper.The second part is the literature review.This section mainly gathered up the impacts of banks and financial ecological environment for debt financing in the domestic and foreign related studies,reviewed the current researches,and clarified the focus of this study.The third part is the definition of the concept and the theoretical basis.First,this section defined the debt financing costs,financial ecological environment and bank connection;second,described the financial environment theory,asymmetric information theory,principal-agent theory and credit rationing theory that related to the concept of the debt financing costs,financial ecological environment as well as banks connection,and discuss the association between these theories with the topic of this paper.The fourth part is the research design.This section is based on the theoretical analysis of the previous section,selected the appropriate sample selection,configured corresponding variables and made assumptions,designed appropriate multivariate regression models in this paper.The fifth part is empirical analysis.This paper selected Shanghai and Shenzhen A-share private listed companies from 2011 to 2014 as samples,made the descriptive statistics,correlation analysis,regression analysis and robustness tests according to the selected sample data by using econometric software,and made empirical analysis for the assumptions in the fourth part.The sixth part is conclusions and policy recommendations.According to the results of empirical article we summarized the conclusions:First,a good financial ecological environment could reduce the costs of debt financing of private enterprises,indicating that improve the financial ecological environment for the development of private enterprises have a certain role in promoting.Second,the bank connection of private enterprises can significantly reduce bank debt financing costs,and in the areas which the financial ecological environment was relatively poor,bank connection played a more obvious role in reducing the costs of debt financing.This paper presented suggestions on the basis of the conclusions drawn on the article and also pointed out deficiencies existed in the research process.The innovations of this paper are mainly reflected in the following aspects:First,this paper researched the impact of bank connection on costs of financing costs from the financial ecological environment perspective.Because the bank connection as a reputation mechanism has its particularity,it can not only play a role in its relationships and reputation mechanism,the staff of experienced bankers have the financial skills that people in other industries don't have.And the financial ecological environment,as a non-accounting constraint,is good or bad for the relationship between banks associated with debt financing costs?Through theoretical analysis and the raising of the corresponding assumptions made a deep exploration on this issue.Second,in debt financing aspect,this article researched from the important dimension the cost of debt financing,through theoretical and empirical correlation analysis,will improve the debt financing research system.Third,for the financial ecological environment variable,not only considered the composite index,but also taken the various elements that constitute financial environment into account.This article will analyze the several related factors of financial ecological environment(influence of local government debt on financial stability,economic base,financial development and institutional culture),considered the improvement of whole and various elements of the financial ecological environment will contribute to the enterprises to obtain external financing,thereby reducing the cost of debt financing of private enterprises.