Combination Of Industry And Finance,Financing Constraints And Main Business Development

The Central Economic Work Conference held at the end of 2016 clearly stated that one of the important tasks of continuing to deepen the supply-side structural reform is to focus on revitalizing the real economy.Due to the problems of overcapacity and low-end products,the development of China's physical industry is very slow.At the same time,the financial sector has developed rapidly.Financial capital needs to serve the real economy.Excessive investment of resources into financial capital will weaken the basis for economic development and increase the threat of economic crisis.Therefore,research on whether the financial sector can support and advance each other with the substantive sector is of profound significance.The process of infiltrating and advancing the physical industry and financial capital is called the integration of industry and finance by the practice community and the academic community.The literature on the study of "Combination of Industry and Finance" is mainly carried out in two aspects: the "financialization" of the entity industry and the holding of financial institutions by entities.By combing the research literature on the economic consequences of combining industry and finance,we find that there are still some shortcomings in the existing literature.Firstly,the practice of entity-holding financial institutions in practice is not uncommon,and there are many studies in the academic community,but they all focus on their impact on financing constraints and investment behaviors,but have not yet studied their development of the main industry or even the real economy.Secondly,in the study of the combination of industry and finance and the development of the main industry,most scholars start from the perspective of “financialization” of the real industry,but less from the perspective of holding financial institutions.Thirdly,the nature of property rights has a great decisive role in corporate investment and financing decisions,and corporate performance.Current scholars are not sufficiently deep on this research.Most of the existing literature does not analyze and test the heterogeneity of the relationship of shareholding financial institutions and the development of main business in different property rights.It can be seen that the analysis of shareholding financial institutions,financing constraints and the development of the main business is still theoretically and practically meaningful.This paper intends to analyze from the following three aspects: Firstly,systematically analyze the annual,industry and regional distribution characteristics of holding financial institutions;secondly,empirically test the impact of holding financial institutions on financing constraints and the development of the company's main business;Lastly,from the perspective of the nature of property rights,it is further analyzed whether there are significant differences in the impact of financial institutions on the financing constraints and the development of the company's main business in enterprises with different property rights.The cash holdings-cash flow(CCF)model is used to measure financing constraints,and the main industry investment rate and enterprise innovation are used to measure the development of the main business.This paper finds that: Firstly,the listed company's shareholding financial institutions can significantly alleviate the financing constraints;Secondly,despite the alleviating of the financing constraints,the development of the main business of listed companies has not been improved.Specifically,it is reflected in the inhibitory effect of holding financial institutions on the investment rate of the main industry and the “crowding out” effect on enterprise innovation.Thirdly,compared with state-owned enterprises,the willingness of non-state-owned enterprises to hold financial institutions is stronger.Correspondingly,the mitigation of financing constraints brought by holding financial institutions is more obvious in non-state-owned enterprises.At the same time,among non-state-owned enterprises,the negative effects of holding financial institutions on the main industry investment rate and innovation investment are significantly stronger than those of state-owned enterprises.The conclusions of this paper have important theoretical and practical significance.On the theoretical level,the above conclusions not only expand and deepen the research on the economic consequences of listed companies' financial institutions from the perspective of the development of the main business,but also expand and deepen the research on the influencing factors of the main business development from the perspective of holding financial institutions.The traditional view is that the combination of industry and finance can promote the development of the main business by alleviating financing constraints.However,the text's research found that although the holding financial institutions have a mitigating effect on financing constraints,they have “squeezed out” the main industry investment rate and enterprise innovation,and inhibited the development of the main business.Moreover,the article finds that holding financial institutions has significant heterogeneity among enterprises with different property rights.This provides new empirical evidence from the perspective of the nature of property rights.At the practical level,the research in this paper will help to provide certain theoretical basis and policy support for the business activities of listed companies and the policy formulation of the regulatory authorities.As an important part of the capital market,non-state-owned enterprises need to abandon the shortcomings of short-term profit and profit,and play the role of financial capital to “help the main business”.At the same time,in view of the characteristics of holding financial institutions and capital profit-seeking,the regulatory authorities need to formulate and issue relevant policies and regulations which is encouraging enterprises to invest additional funds brought by the financial sector into the real industry,and limiting the excessive financialization of enterprises and the behavior of short-selling the main business.