Interest Rate Liberalization?Financial Constraints And Dynamic Adjustment Of Capital Structure

Capital structure is one of the most important aspects in the field of corporate financial management.The capital structure that does not match the company's situation may raise the cost of external financing,which may lead to the increase of financial risk of the company.At the same time,it may also affect the company's operating conditions and final value evaluation,which leads to the problem of capital structure adjustment.As a decisive measure of macro-market environment reform,interest rate liberalization reform will directly affect micro-entities and the external financing environment of companies.Relevant departments of our government have emphasized the importance and strategic significance of interest rate liberalization reform many times,and constantly promoted the reform with practical actions.The adjustment of the floating cap of deposit interest rate in 2015 and its eventual complete liberalization marks the nominal end of the 20-year-long reform journey in China.From a theoretical point of view,the gradual deregulation of interest rate formation mechanism will provide a market-oriented environment and channels for the external financing of the entity company,and promote the company to adjust its capital structure smoothly at a reasonable speed and extent.Taking all A-share listed companies in Shanghai and Shenzhen Stock Exchanges from 2007 to 2016 as the research object,this paper explores the relationship between the degree of reform promotion and the speed of capital structure adjustment through the dynamic adjustment model,and explores the mechanism of the above-mentioned influence relationship in detail based on the relevant theoretical analysis with financing constraints as intermediary variables.In addition,the sample will be compared and analyzed according to the nature of the company's property rights,and explore the heterogeneity of the company under different property rights.Finally,in the part of further analysis,we also examine the strength of the above-mentioned relationship between companies of different sizes and debt levels,and present in more detail the results of the current interest rate liberalization reform,and provide the basis for the further promotion of the reform.After the empirical test of the text part,and the change of the measure and regression mode of the index of interest rate liberalization degree and financing constraint variable in the robustness test part,the empirical results of this paper show that:(1)For the speed of capital structure adjustment,the liberalization of interest rate has a positive promoting effect.The more perfect the market-oriented system is,the more flexible and fast the company can adjust its capital structure according to its needs.(2)Financing constraints as intermediary variables satisfy part of the intermediary effect.For the speed of capital structure adjustment,interest rate liberalization has a positive effect by reducing the degree of financing constraints.(3)The nature of property rights has heterogeneity in the above relationships.With the improvement of interest rate liberalization,the speed of capital structure adjustment of non-state-owned companies is faster than that of state-owned companies.(4)Firstly,the improvement of interest rate liberalization degree has increased the speed of capital structure adjustment of different size companies,and at the same time,the improvement of interest rate liberalization degree in the sample period has more effectively alleviated the financing constraints of small and medium-sized companies and provided them with a more convenient external financing environment;secondly,the impact of debt level,the speed of capital structure adjustment of companies with different adjustment directions.The interest rate liberalization reform has effectively helped the over-indebted companies to control unproper debt to adjust their capital structure to the optimal value,while effectively alleviating the financing constraints of the under-indebted companies.The possible contributions of this paper are as follows:(1)enrich the dynamic adjustment of capital structure from the perspective of interest rate liberalization;(2)targeted explore the influencing path of interest rate liberalization on the dynamic adjustment of capital structure;(3)quantify the liberalization degree of interest rate more accurately for empirical study.