The Impact And Trade-off Between Rapid Expansion Of Enterprises And Financial Risk

As a driving and risky industry,China's real estate industry has developed rapidly for many years with a high level of leverage(the asset liability ratio has been maintained at a high level of over 70% all the year round).In recent years,the continuous tightening of the bank credit policy and the gradual implementation of the purchase restriction policy make the real estate industry fund breaking events occur frequently,causing widespread concern.Based on this,this paper studies how to balance the rapid expansion and financial risk.Due to the rapid expansion of China Fortune in recent years,which ranks first among the "top five real estate listed companies in 2018",while corresponding to its severe capital chain crisis,this paper chooses China Fortune as a case study.The case study found that policy dividend laid the external environment foundation for enterprise expansion,management confidence and PPP business model promoted enterprise "over expansion",while "over expansion" significantly affected the profitability and operation ability of enterprises,thus further expanding the capital gap.Under the influence of different financing constraints of equity financing and debt financing,enterprises rely too much on debt financing to make up the financing gap,which makes the financing structure significantly deviate from the reasonable section,expand the term mismatch,and ultimately improve the financial risk.On the one hand,China Fortune is not willing to give up the dividend of rapid expansion of the enterprise,on the other hand,it is difficult to use reasonable financing allocation to meet the funding gap,which eventually leads to financial crisis.It is obviously improper to support the growth with excessive financial risks,but it is not necessary to completely deny the high-speed growth of enterprises because of the objective existence of financial risks.Enterprises need to consider the driving factors and potential risks behind the growth in combination with their own reality,so as to balance the growth and risk,and promote the growth of enterprises to the maximum extent under the control of risks.The innovation of this paper is mainly reflected in two aspects: the theoretical innovation of financing constraints and the dynamic transmission mechanism.First,this paper discusses the impact of the difference between equity source and debt source on financial risk.In the past,most of scholars' researches on financing constraints are based on the financing constraints faced by the whole enterprise(including the financing gap,the difference of financing cost between internal and external sources,etc.),while ignoring the difference of the impact of different financing sources on financial risk.Second,this case study focuses on the dynamic transmission mechanism.Understand the transmission mechanism of rapid expansion and crisis,so as to put forward targeted suggestions on how to reduce risks while ensuring growth to the maximum extent.The tight credit policy and the limited purchase policy are the "trigger point" of the frequent crisis rather than the core influencing factors.What really makes the real estate in high risk is its mismatched and unbalanced financing strategy under the rapid expansion.Based on this,this paper puts forward the following three implications: first,matching debt maturity and asset maturity,and adopting suitable financing allocation.Second,improve the operational capacity of enterprises.Third,if the financing channels and costs of enterprises are limited in the process of expansion,enterprises should carefully choose unreasonable financing allocation to meet the funding gap,but reverse reduce their own expansion speed to ensure the safe development of enterprises.