Research On The Impact Of Shadow Banking Of Entity Enterprises On Default Risk

After the outbreak of the financial crisis,the scale of shadow banking in China showed a brutal growth,maintaining a large stock size even after special government regulation.As a result of China’s economic transformation and growth slowdown,market demand has also shrunk,and the oversupply of production capacity of real enterprises has led to a decline in business performance and a consequent decline in the rate of return on real investments.Many real enterprises are keen on the high liquidity and high rate of return of financial investments and have started to financialise under the motive of preventive savings and profitseeking,and more and more real enterprises have started to act as credit intermediaries to carry out shadow banking business However,it remains to be explored whether it will affect the default risk of enterprises.Therefore,the key question of this paper is how the shadow banking of real enterprises will affect the default risk? And on this basis,what are the impact paths of shadow banking of real enterprises affecting default risk?This paper firstly compares the relevant studies on shadow banking,shadow banking of real enterprises and corporate default risk,combines principal-agent theory and financing constraint theory to launch a theoretical analysis of the research question,and argues that shadow banking of real enterprises has an exacerbating effect on default risk,and proposes that cash flow volatility risk and main business income are among the impact paths.Then,using the data of A-share listed non-financial real enterprises from 2008 to 2021 as the sample,the research hypotheses were tested through an empirical model to form the following three research findings.First,the expansion of shadow banking by real enterprises will exacerbate default risk,and as the scale of shadow banking by real enterprises increases,their default risk increases,and this finding remains reliable after endogeneity tests by the IV instrumental variables method and the systematic GMM method,as well as robustness tests by replacing dependent variables and sample intervals.Second,the shadow banking of real firms increases the default risk of firms by exacerbating the risk of cash flow volatility and reducing main business earnings.Third,the expansion of shadow banking by real firms with weaker external regulatory intensity,under economic contraction and with a higher degree of financing constraints has a stronger effect on the exacerbation of default risk.Finally,based on the above findings,this paper makes recommendations to real enterprises,capital market participants as well as government policy-making and regulatory authorities to regulate the shadow banking business of real enterprises in China,strengthen regulation and maintain a stable and healthy financial system.