Research On The Impact Of Bank Credit On The Pricing Of Corporate Bond In China

With the relaxation of the threshold requirements for bond issuers by the China Securities Regulatory Commission in 2015 and the implementation of the new Securities Law in 2020,China’s corporate bond market has flourished and the market size is constantly expanding,playing an increasingly important role in China’s financial system.However,with the continuous expansion of China’s corporate bond market,the number of bond defaults has gradually increased,and the scale of defaults has continued to climb.In 2021 alone,the default amount reached as high as 2016.39 billion yuan,a year-on-year increase of 27.2%.The increasing number of default events has caused widespread concern about the credit risk of corporate bonds.In this context,how to effectively assess the credit risk of corporate bonds and thereby promote the reasonable pricing of corporate bonds is a question worthy of in-depth discussion.The bank credit line is the maximum limit of unsecured credit loan granted by the bank to the client company for a certain period of time,and implicitly represents a comprehensive evaluation of the credit risk level of the client company by the banking system.In the corporate bond market,can bank credit line information help investors to reasonably assess the credit risk of the bond issuing company and thus promote reasonable pricing of corporate bonds? Given the strong practical significance of this issue,this paper examines it.According to the sequence of corporate bonds from issuance to circulation,the corporate bond market is divided into primary issuance market and secondary trading market.Therefore,this paper first studies the impact of bank credit on the pricing of corporate bond issuance,and then studies the impact of bank credit on the pricing of corporate bond secondary markets,thereby comprehensively studying the impact of bank credit on corporate bond pricing.The main research contents and conclusions are as follows:Firstly,in order to study the impact of bank credit on the pricing of corporate bond issuance,the data of corporate bonds publicly issued by A-share listed companies in Shanghai and Shenzhen from 2015-2021 are selected and a multiple regression model is constructed.The pricing of corporate bond issuance is measured using the credit spread of corporate bonds issuance.The bank credit line is used as the core explanatory variable and a series of control variables are selected for the empirical analysis.We conclude that higher bank credit line can send a positive signal to investors in the issuance market,which helps alleviate the information asymmetry faced by investors,thereby reducing the credit spread of corporate bond issuance.This indicates that bank credit can promote the reasonable pricing of corporate bonds in the issuance market.A further study reveals that the negative effect of bank credit on the credit spread of corporate bond issuance is stronger when the bond maturity is shorter or the internal control quality of the bond-issuing company is lower.This indicates that bond maturity and internal control quality can effectively moderate the negative relationship between bank credit and corporate bond issue pricing.Secondly,in order to study the impact of bank credit on the pricing of corporate bonds in the secondary market,annual transaction data of publicly issued corporate bonds of A-share listed companies from2015-2021 are selected and a multiple regression model is constructed.The secondary market credit spread of corporate bonds is used to measure the pricing of corporate bonds in the secondary market.The bank credit line is used as the core explanatory variable and a series of control variables are selected for the empirical analysis.We conclude that higher bank credit line can send a positive signal to secondary market investors,which helps alleviate the information asymmetry faced by investors,thereby reducing the credit spreads in the secondary market of corporate bond.This indicates that bank credit can promote the reasonable pricing of corporate bonds in the secondary market.A further study reveals that the negative effect of bank credit on the credit spread of corporate bond issuance is stronger when the audit quality of the issuing company is lower and the company size is smaller.This indicates that audit quality and company size can effectively moderate the negative relationship between bank credit and the secondary market pricing of corporate bonds.Finally,combining with the conclusions of this paper,in order to help investors evaluate the credit risk of corporate bonds more effectively and solve the problem of unreasonable pricing of corporate bonds,feasible suggestions were proposed for corporate bond investors,bond issuing companies,and regulatory authorities,and point out the research shortcomings of this paper.