Equity Pledge,Bank-enterprise Relationship And Financing Constraints

The phenomenon of equity pledge of listed companies is common,and the A-share market can be described as “no stocks and no loans”.The number of listed companies pledged in 2017 was as high as 1987,and the market value of pledge was 3.8 trillion.As of June 2018,94.9% of the listed companies had implemented equity pledges.Equity pledge has become a common financing method for listed companies and plays an important role in the financing system.Due to the simple procedures of equity pledge,relatively low financing costs,and fast approval,it has indirectly eased corporate financing constraints.Some listed companies with high pledges are on the verge of falling below the liquidation line and triggering more chain reactions.These problems have a greater impact on the healthy development of the capital market.The impact has been highly valued by the regulatory authorities.In early 2018,the CSRC,together with the Shanghai and Shenzhen Stock Exchanges,issued the "Stock Pledged Repo Trading and Registration and Settlement Business Measures(Revised in 2018)"(hereinafter referred to as the new pledge).The introduction of the new pledge rules indicates that the regulatory authorities are highly concerned about the increasing pledge business capital flows of listed companies and the liquidity risk of equity pledges.In October 2018,the CBRC implemented the requirements of the State Council's “six stables”.It is stipulated that banking financial institutions should scientifically and reasonably manage risk management of equity pledge financing business.When the pledge goods touch the stop loss line,the pledge party should comprehensively evaluate the actual risks of the pledgee and future development prospects,and take appropriate measures to handle it steadily.And allow insurance funds to set up special products to participate in the resolution of the liquidity risk of listed companies' stock pledge.Coincidentally,in the same month,the CSRC encouraged various types of funds and qualified private equity investment funds managed by local governments to help listed companies with development prospects but short-term operational difficulties to ease the plight of stock pledges and promote their healthy development.The new policy attaches great importance to the risk and dilemma of equity pledge.However,there are few studies on the economic consequences of equity pledge in academia.Only a small amount of literature talks about the impact mechanism of equity pledge on financing constraints.There are few scholars on how to prevent the adverse effects of controlling the pledge liquidity risk on mitigating financing constraints.The biggest risk of stock pledge comes from the great uncertainty of equity value,while the bank-enterprise relationship can optimize debt financing management and reduce liquidity risk;the spillover effect of bank-enterprise relationship can provide enterprises with more loans and reduce financing constraints.Under the circumstance that the equity pledge mitigation financing constraints are uncertain,whether the existence of the bank-enterprise relationship can effectively “suppress” the liquidity risk brought by the pledge.This paper discusses the impact of equity pledge and bank-enterprise relationship on financing constraints in combination with the newly introduced related equity pledge policy.The research consists of seven chapters.The first chapter is the introduction,which mainly introduces the background of financing constraints and the significance of studying the phenomenon of equity pledge,and introduces research problems,research ideas and direction.The second chapter is about the institutional background,including the development process of equity pledge and its role in the financial system,as well as a summary of relevant research literature.The third chapter is the theoretical analysis of financing constraints and the hypothesis of this paper.The fourth chapter is the empirical research design.The fifth chapter conducts empirical research on the model and draws the results around the following aspects:(1)How the equity pledge affects the financing constraints in different time periods;(2)Whether the bank-enterprise relationship can restrain the equity pledge on the financing constraints The negative impacts;(3)which factors will change the extent of the impact of equity pledge on corporate finance.The sixth chapter further analyzes the motives and intentions of the controlling shareholder's equity pledge,and tests whether the bank-enterprise relationship can play a role under the controlling shareholder's equity pledge.The final chapter presents the limitations and recommendations of this paper.This paper finds that the equity pledge is affected by the pledge period when easing the financing constraints.The specific performance is as follows: First,the listed companies that have multiple consecutive pledges can not only ease the financing constraints,but will intensify the financing constraints;Sexual equity pledges can significantly ease financing constraints.Second,regardless of the pledge period,the relationship between banks and enterprises can effectively alleviate the phenomenon of corporate financing constraints and restrain the negative impact of equity pledge on financing constraints.Thirdly,when the sub-samples are returned,it is found that the relationship between the bank and the enterprise under the pledge of the controlling shareholder's equity will lose its utility,indicating that the role of the bank-enterprise relationship can suppress the pledge risk under the pledge of the non-controlling shareholder's equity.Although the implementation effect of the new pledge rules still needs further observation and inspection,the research in this paper finds new reference significance for the implementation of the new pledge rules.This paper believes that in the process of implementing the new pledge rules,the regulatory agencies can combine the financing intentions and pledge periods of the financing parties,and should be treated differently: focus on solving the pledge of enterprises pledge due to short-term business difficulties,and be wary of long-term pledge or large-scale pledge Capital market order behavior promotes the healthy development of the stock market.