The Influence Of Government Debt On Corporate Financing And Investment

In 2008,the financial crisis triggered by the US subprime mortgage crisis swept the international financial market rapidly,damaged the economic system of many developed countries,and brought unprecedented challenges to emerging economies.Hence it caused the slowdown of global economic growth.In order to maintain the stability of the domestic financial system,the Chinese government began to implement loose monetary and fiscal policies.During the past 10 years,the scale of government debt has been expanding.While promoting economic development and coordinating regional resource allocation,it has also brought a series of problems.The financial resources of the whole society are limited as a whole.When the financing demand of the government departments rises sharply,it will squeeze the credit resources originally belonging to the company to a certain extent and increase the financing cost of the company.The huge capital needs of the government are likely to have an impact on the financing needs of micro-enterprises,which will affect the various decisions of micro-enterprises.In theory,the impact of government debt on the scale of corporate debt financing mainly through two channels,price competition channel and capital competition channel.The increase in government debt financing needs will reduce the company's debt financing scale.In addition,the government's investment due to the issuance of debt will also have a crowding out effect on the company's investment to a certain extent.As for the relationship between government bonds and the liquid assets held by the company,the positive and negative relationship between the two both have theoretical rationality.So we need to use our relevant data for empirical analysis to draw conclusions.Based on the above points,this paper will study the domestic and foreign related literature,through theoretical analysis and empirical analysis system to study the growth of my government debt on corporate debt financing behavior,investment behavior and holdings of liquid assets.The contribution of this article lies in the following two points.First of all,this paper not only studies the company's investment and financing behavior,but also innovatively pays attention to the impact of government debt issuance on the liquidassets held by the company.It hopes to fill the gaps in relevant domestic research to a certain extent and lay down the relevant research for the future.Second,the research in this paper is a powerful complement to the relevant research on the economic consequences of the government's financing through debt issuance.Based on the macroscopic time series regression,this paper also attempts to use the company's financial data for panel data regression,hoping to improve the effectiveness of the estimation.And this paper takes into account the actual situation in China,thus can provide more recommendations for the coordinated development of domestic government financing and private financing in line with China's national conditions.Based on the sample of China's Shanghai and Shenzhen A-share non-financial listed companies from 2002 to 2018,the paper used quarterly departmental aggregate data and company panel data to explore the influence of government debt on firms' investment and financing decisions and the scale of liquid assets held by them.The empirical results show that,firstly,the increase in government debt issuance will lead to a reduction in the size of the company's interesting bearing debt financing,and at the same time,in the choice of financing channels,the company will tend to significantly reduce the size of long-term interest-bearing liabilities.Secondly,the increase in government debt issuance will significantly reduce the company's investments.The rapid growth of government debt does have a crowding out effect on micro-enterprise investments.Thirdly,given that the increase in government debt issuance has an impact on the company's investment and financing decisions,this paper further prove that it will have a significant negative impact on the company's net profit,hindering the development of the company's department and making the company reduce its scale of liquid assets in daily business activities.Then,this paper further divide the company into state-owned enterprises and non-state-owned enterprises according to the nature of the actual controllers to test the heterogeneity impact of government bonds on the financial policies of listed companies.The results show that the impact of government financing behavior on the companies' financing scale is different due to the ownership property.Because the debt of state-owned enterprises is similar to national debt and the substitution is also large,their financing scale is negatively affected by the government financing behavior.On the other hand,the negative impact of government debt on the investments of non-state-owned enterprises,the size of liquid assets held,and the rate of return on assets is significantly greater than that of state-owned enterprises.The investment,liquidity and profits of non-state-owned enterprises are more negatively affected by government financing scales.The possible reason is that in the context of China's system,state-owned enterprises enjoy state support in many aspects,and the credibility in the market is higher than that of non-state-owned enterprises.Non-state-owned enterprises are more actively seeking other sources of funding,especially internal sources of funds,while making capital investments by efficiently using loans obtained from banks at high cost.Therefore,the profit of non-state-owned enterprises is significantly negatively affected,and the scale of investments will be significantly reduced due to the limitation of financing sources.The size of liquid assets held will also be negatively affected to reduce unnecessary capital costs.Last but not least,based on the empirical results,the paper has put forward some policy recommendations.First,we must reasonably control the issuance of government bonds and avoid follow-up problems caused by excessive debt.Second,we need to eliminate financing discrimination against the company sector,broaden financing channels,and encourage and stimulate corporate debt financing.Finally,we must clarify the direction in which the government uses funds generated through debt issuance,improve the internal structure of government capital investment,and create a benign competitive situation between government departments and corporate departments.