The Impact And Mechanism Of Credit Supply Cycle On Corporate External Financing

Financing decision-making is vital for corporations to ensure the sustainable operation and development.And it has been a hot issue in the field of corporate finance.In theory,there are more and more researches focusing on the relationship between macro economic fluctuations or policies and microeconomic behaviors in recent years.Credit market is regarded as an important conduction channel from macro level to micro level.So it's hard to understand this research area without studying the effect of credit supply on corporate micro behaviors.In reality,global financial situation becomes increasingly serious,and frequent credit fluctuations make an even stronger impact on the real economic activities.The government and central bank are also constantly adjusting the speed and intensity of credit supply through the use of credit policies instruments.Based on the above backgrounds,it is significant to study the impact and mechanism of credit supply cycle on external financing.This study mainly focuses on the influence of credit supply cycle on corporate debt financing and equity financing in China,and consider the changes of corporate balance sheets and the degree of managerial confidence in our analytical framework to explore microcosmic regulation mechanism.According to the theoretical analysis and research hypothesis,this paper selects data from the first quarter of 2003 to the fourth quarter of 2015 and uses empirical analysis.Our findings shows that,credit supply cycle(including credit growth rate and intensity,change in credit capacity)has a significant impact on debt financing and equity financing.The expansion of credit supply will increase corporate debt financing and reduce corporate equity financing,and vice versa.In the process of the influence of credit supply cycle on corporate external financing,the increase in collateral assets will enlarge its impact both in debt and equity financing.But when corporate cash flow increasing,only the impact on debt financing is weaken,not including the impact on equity financing.In addition,the impact of the credit supply cycle on corporate debt financing and equity financing will be magnified when the confidence level of managers enhances.The conclusions of this study have some reference value to corporate financing decisions and government's administrative measures for credit supply.Fluctuations in credit supply cycle should be paid more attention in corporate financing behaviors.By adjusting corporate financial characteristics and the mentality of managers,corporations will deal with macro credit shocks better.The government should strengthen the monitoring of abnormal fluctuation of credit to prevent the disadvantage of credit shocks on the real economy through corporate finance.Central bank should consider the perspective of macro credit and the real economy when formulating credit policies.