A Study On Structural Differences And Reasons Of Increasing Corporate Leverage In China

Since the global financial crisis in 2008,China has been in a economic downturn,and corporate leverage has been rising all the way,much higher than that of developed countries and emerging market countries.High leverage ratio not only increases financial costs,but also increases the risk of debt default.So it is worthy discussing the mechanism of the high-level corporate debt and its internal structure.Furthermore the structural differences and risk of corporate leverage are analyzed so as to solve the problem of highlevel debt and to provide some advice.Based on previous research,a panel data model is established to discuss the direct impact of economic downturns to corporate leverage,and to explore the indirect effects of economic downturns on corporate characteristics and then on leverage.Then,based on corporate size and its ownership,corporates are divided into financially constrained and unconstrained ones to do empirical research,and to quantitatively analyze the cyclicality of different types of corporates.The empirical results show that high leverage ratio in China is mainly due to high-level debt of large-scale and state-owned corporates,and leverage of small or medium-size corporates is not high due to financial constraints.Leverage of largescale and state-owned corporates evolves counter-cyclically,in contrast,leverage of non-state-owned and small or medium-scale corporates evolves pro-cyclically.Finally,some advice about over-debt problem and leverage structural imbalance is put forward.(1)Weigh between deleveraging and economic growth.(2)Treat the state-owned and non-state-owned corporates equally while allocating the financial resources.(3)Improve capital market,develop direct financing channels and complete the capital structure of corporates.(4)Speed up the process of internationalization,reduce the barriers for international investors.(5)Pay attention to risks.