Research On The Contagion Effect Of Credit Risk Within Enterprise Groups

Influenced by various factors,defaults in China’s bond market have occurred frequently since 2018,making corporate credit risk continue to rise.Group enterprises,due to the existence of frequent interconnected transactions among members,are also facing potential credit risk problems while enjoying the operational advantages brought by group operation.When one of the group companies has a credit crisis,it will damage its own image and also produce some negative contagion effects such as abnormal fluctuations in share prices,which may in turn have different degrees of impact on the group’s member companies,causing the credit risk to spread further and leading to a serious deterioration of the group’s overall credit situation,and even causing a chain reaction in the market and spreading to other affiliated companies.However,the mechanism of credit risk contagion among group members is often complex and potential,and how to effectively identify the credit risk contagion effect in an enterprise group has become a hot issue.If the contagion of credit risk within a group can be analyzed,recommendations can be made to diversified corporate groups to prevent and control risk contagion.This paper adopts a case study approach and selects Aerospace Communications Holdings Group Co.,Ltd.as a case study object to study the transmission path and causes of credit risk in Aerospace Communications Holdings Group Co.,Ltd.from multiple perspectives.As a listed company with a central enterprise background,Aerospace Communications Holdings Group Co.,Ltd.has been a leading player in the country in areas such as defence technology.In 2019,it was voluntarily delisted after a financial restatement due to a scandal involving a subsidiary that was exposed to fraud.Based on publicly available information,this article firstly compares the process of credit risk formation in Aerospace Communications Holdings Group Co.,Ltd.and separately summarizes the different manifestations of credit risk contagion in group parents and subsidiaries;secondly summarizes the manifestations of credit risk contagion within Aerospace Communications Holdings Group Co.,Ltd.and explores the causes of this credit risk in the light of the actual situation of the Group;and finally makes recommendations on the prevention and control of credit risk contagion in Aerospace Communications Holdings Group Co.,Ltd.Based on a typical case,this paper finds that the credit risk of the Aerospace Communications Holdings Group Co.,Ltd.shows a contagion path from the core subsidiary to the parent company to the group’s subsidiaries.Analysis of the causes of its risk reveals that the main reasons for the contagion of credit risk are the complicated connected transactions between the parent company and its subsidiaries and the company’s concurrent management,improper management and internal control failures.Therefore,this paper makes the following recommendations at both the enterprise group and external regulator levels: firstly,to strengthen the management of connected transaction guarantees and improve the internal control and control system;secondly,to unblock internal information and communication channels and optimise the internal governance structure;and finally,to increase external supervision methods and penalties to prevent credit risk contagion from multiple angles.