The “Belt And Road” Initiative And Its Impact On The Level Of Corporate Cash Holdings

In order to meet the challenges brought by the “new normal” of economy,General Secretary Xi put forward “the Belt and Road” initiative in 2013.By the end of 2021,China had signed a total of 206 government documents with 140 countries and 32 international organizations.Countries participating in the “the Belt and Road” initiative have spread all over Asia,Africa,Europe,Oceania,Latin American and Western Europe.During this period,the proportion of trade volume between China and countries along the “the Belt and Road”initiative in total foreign trade increased year by year,from 25% in 2013 to 27.4% in 2018.In addition,China has also implemented 100 projects in countries along the route,such as “Happy Homes”,“Helping Farmers with Love” and “Helping Doctors with Rehabilitation”,to help the countries along the route to achieve popular support with China.This article cuts in from a new perspective of cash holding level,and uses the quasi-natural experiment provided by the “Belt and Road” initiative to test its microeconomic effects.In theory,the implementation of the “Belt and Road” initiative will increase the operational and financial risks faced by enterprises,and cash is an important tool for enterprises to resist risks.Therefore,enterprises may raise the level of cash holdings to resist risks.The empirical test of China’s A-share listed companies from 2011 to 2017 supports the above theoretical expectations.It is found that the cash holding level of the enterprises participating in the “the Belt and Road”initiative has improved significantly,and this conclusion is still true after the robustness tests such as parallel trend test,substitution variable index,placebo test,data of the year when the initiative was put into practice,tendency matching score,elimination of other policy influences,and lag of control variables.Through the channel test,it is found that the implementation of the“the Belt and Road” initiative to improve the cash holding level of enterprises is mainly achieved by increasing the business risks and financial risks of enterprises.Further analysis results show that the effect of “the Belt and Road” initiative on improving the cash holding level of participating enterprises is more obvious in enterprises with higher agency cost,weaker investor protection,and lower proportion of audit and independent directors of non-four big firms.At the same time,this paper finds that the improvement of cash holding level of participating enterprises mainly comes from tax refund,external borrowing and asset disposal.Based on the research results of this paper,the last part of this paper is how policy-making departments and enterprises can make full use of the “the Belt and Road” initiative to enhance their own strength,reduce risks and promote the healthy and sustainable development of enterprises themselves and domestic economy.This paper enriches the research on the influencing factors of corporate cash holdings and the economic consequences of the “the Belt and Road” initiative,and lays the foundation for future scholars’ research.