Economic Policy Uncertainty, Bank Credit And Corporate Investment

As one of the most important financial decisions,Investment decision-making is not only determines the business risk,profitability and capital market evaluation of its business performance and future development prospects,but also relates to a country’s macroeconomic growth.Even if the consumption is placed at the top of economic growth drivers,investment is still the main driving force for China’s rapid economic growth.From the beginning of the financial crisis in 2008,issues as overcapacity,slow growth of macroeconomic continue to emerge,as an important means of economic regulation,the Government frequently introduced and adjusted various economic policies to optimize the allocation of resources.At present,China’s economic development has entered a "new normal",emphasizing the sustainable development based on the symmetrical structure of economic structure.Capacity reduction,de-stocking,deleveraging,cost reduction and improving underdeveloped areas are the keys to the structural reform of supply-side.Economic policy as an important factor in the supply-side reform,how the uncertainty caused by frequent adjustment affects the company’s investment behavior,whether it is the incentive to the excess of the real economic production capacity,not only has an important reference significance for our country’s policy-making departments to formulate and implement China’s future economic policy,but also relates to whether companies can deal with macroeconomic shocks,improve their investment efficiency and realize the effective allocation of resources.In the past,scholars mainly focused on the impact of economic policy adjustment on the company’s investment behavior,as well as the relationship between economic policy uncertainty and the level of corporate investment.There was little concern about the impact of macroeconomic policy uncertainty on the efficiency of corporate investment,which is a focus of this paper.In addition,based on the existing literature focusing on the direct effect of the uncertainty of economic policy on the investment level of the company,this paper also analyzes the role of bank credit and attempt to illustrate that the uncertainty caused by the frequent adjustment of economic policy will affect the company’s investment through the way of bank credit.This paper uses China’s economic uncertainty index to measure the degree of uncertainty in China’s economic policy and takes all A-share listed companies in stock markets of Shanghai and Shenzhen from 2000 to 2016 as a sample study to check the relationship between economic policy uncertainty and firm investment level,investment efficiency and the intermediary role of bank credit in the impact of economic policy uncertainty on corporate investment.We can come to the following conclusions:(1)The increase in the uncertainty of economic policy will significantly inhibit the level of capital investment,and further analysis found that this inhibition is more significant in non-state-owned enterprises and high-growth companies.(2)Economic policy uncertainty will significantly reduce the investment-investment opportunities sensitivity,that is,the increase degree of economic policy uncertainty will decrease the investment efficiency of companies.(3)Bank credit financing is the intermediary variable of economic policy uncertainty affecting corporate investment,that is,the uncertainty of economic policy will affect the company’s investment by affecting the bank loans obtained by the company.The above results show that the uncertainty of economic policy will affect the investment level of enterprises through the credit channel.As the private enterprises and high-growth companies receive less bank financing support,the investment level is decreased more significantly.Whether it is state-owned enterprises or private enterprises,High-growth enterprises or low-growth enterprises,economic policy uncertainty will decrease the investment efficiency of enterprises,and curb the efficiency of resource allocation.Based on the above conclusions,this paper puts forward some suggestions from the aspects of strengthening the capacity building of enterprises to improving the ability of resisting risks,deepening financial reform to broaden the financing channels of enterprises and maintaining the stability and transparency of macroeconomic policies.In addition,the possible innovation of this article is mainly reflected in the following: firstly,the current literature focuses on the relationship between economic policy uncertainty and the level of corporate investment,as well as the impact of government economic policy adjustment on corporate investment behavior decision,such as monetary policy and industrial policy,few scholars study the impact of policy uncertainty on the real economy from the perspective of investment efficiency.This paper further studies the relationship between economic policy uncertainty and enterprise investment efficiency,enriching the related literature of the interaction between macroeconomic policy and micro enterprise behavior.Secondly,this paper analyzes the impact of economic policy uncertainty on the decision-making of investment behavior from the credit financing channel,and finds that bank credit financing is the intermediary variable of economic policy uncertainty and corporate investment,which is different from the previous analysis based on real option theory.