The paper “Financial Structure and Non-financial CorporateDeleveraging”, coauthored by Professor Xiaofen TAN of the School of Finance, doctoral student Yuan LI and undergraduate Kexin WANG of the School of Statistics and Mathematics, was published in the 2nd issue of “China Industrial Economics” in 2019.
Abstract:This paper employs panel data of non-financial corporates in 47 countries and areas from 2000 to 2015 and two-way fixed-effect model toinvestigate the relationship between financial structure and corporate leverage. The results show that there is a significant negative relationship between financialstructure and corporate leverage. On average, 1% increase in the degree ofmarketization of financial structure will lead corporateleverage to decline 0.44% while increasing corporate debt maturity. Furthermore, this effect will showsignificant heterogeneity among different countries or regions, industries and enterprises. This effect is more pronounced for firms in the countries or regions withless reliance on investment as a proportion of GDP, higher level of financialdevelopment, more perfect regulation quality, more transparent information disclosure and for firms in the innovation industry. For firms with high leverage ratio, large size, poor profitability, low ownership concentration and weak political connection, the marketization of financial structure plays a more significant role in deleveraging. Meanwhile, at the macro level, the government should change the mode of economic growth, promote the transformation of economic structure, strengthen supervision and improve the information disclosure system; at the micro level, improve the corporate governance structure and reduce the degree of government intervention in enterprises.
Key Words:Financial Structure;Non-financial Corporate Leverage; Deleveraging;Financial Development