The Research On The Misallocation Of Financial Resources And Its Impact In The Banking System

The financial resources of the banking system should have been based on the pr inciple of serving the real economy and improving the efficiency of the use of financi al resources.However,why did the financial industry become "idle" and eventually flo wed to some inefficient enterprises?The reason why the banking system allocates limited financial resources to ineffi cient enterprises is that commercial banks are faced with the problem of “asymmetric information” when deploying financial resources.In case of asymmetric information,b ecause commercial banks cannot accurately know the risk-return situation of enterprises,they have to adopt a combined approach of interest-rate mechanism and a credit rati on mechanism to configure financial resources.In the objective environment given the degree of asymmetric information,a certain proportion of credit rationing is necessary.It can reduce the vulnerability of commercial banks,thereby reduce the systemic risk s of the entire economy.However,when the credit ratio exceeds a certain level,or if the “special mechanism” on which the commercial bank's credit rationing is based is unreasonable,the commercial bank's financial resources will have more serious “mis match”.The typical performance is that commercial banks have serious "ownership pre ferences","big business preferences" and "collateral preferences" in the allocation of fi nancial resources.Second,in addition to information asymmetry,another important external factor t hat influences the "mismatch" of commercial bank financial resources is the interventio n of government.The intervention of government can be divided into direct interventi on and indirect intervention.Direct intervention mainly means that the government dir ectly intervenes the behavior of commercial banks in the financial resources allocation through administrative orders;indirect intervention mainly refers to direct subsidies or the way of “hidden” guarantees,which indirectly affects the behavior of commercial banks by distorting the risk-return characteristics of some companies.When the govern ment's intervention in some enterprises is in line with the direction of industrial upgra ding,this kind of intervention is a “correction” of market failure,and it is efficient;but when the government's improper intervention results in the enterprises that should n ot have obtained financial resources obtained financial resources,the financial resource s of commercial banks would also appear to be "mismatched."In addition,the banking structure and asset bubbles(especially the real estate bu bble)will also lead to a "mismatch" in the financial resources of the banking system.The impact of the banking structure on the allocation of financial resources is mainly reflected in two aspects.One aspect is the level of competition of the banking indust ry.The lack of competition will lead to commercial banks lack of risk identification c apabilities,which in turn will increase the degree of information asymmetry;Another aspect is the distribution of the scale in banking industry.The banking industry has th e preference of big banks for large companies.When the distribution of the scale in banking industry is flawed,it will lead to the financing needs of some financing entiti es not satisfying.The impact of asset bubbles on the allocation of financial resources is also reflected in two aspects.On the one hand,asset bubbles affect the value of co llateral,which in turn distort the risk-return characteristics of financiers,resulting in e nterprises with land or real estate that are more likely to get loans;On the other han d,the asset bubble will attract financial resources from other industries to the industry in which the asset bubble is located,which in turn will create "crowding out" effects on other industries.In the credit market's imperfect situation,enterprises with more initial net assets will have some advantages in the credit market,and the superposition of direct and i mplicit government intervention and this "net wealth effect" can further strengthen this advantages.As a result,in recent years,China's enterprises have gradually divided int o two major categories: one is the company that has more net wealth and is subsidize d or implicitly guaranteed by the government(hereinafter referred to as the “mismatc h” sector),including some state-owned enterprises,local government financing platform s,companies with more real estate or land,etc.,which have low productivity,but the y have credit advantages;the other type is the company that do not have many net a ssets and do not have the support of the government.(Hereinafter referred to as "othe r companies"),although they have high productivity,it is difficult to obtain financial s ervices.This dual enterprise structure resulting from the heterogeneity of whether or not companies have credit advantages has had a huge impact on our macroeconomics:First of all,the first type of low-productivity companies,that is,companies in t he “mismatched” field,can meet the credit conditions of commercial banks,and thus can easily obtain financial resources from the banking system,and thus tend to over use of capital,which in turn causes the decline in the rate of return on capital and a series of problems such as "TFP derogation",real estate bubbles,expansion of local debt,and overcapacity,and the government's "administrative" regulatory measures cann ot fundamentally change the objective financial resource allocation environment faced by commercial banks.Instead,it gave birth to the rapid development of shadow banki ng.The misallocation of financial resources in the banking system has led to a rapid accumulation of financial risks in China,which has severely affected financial stability.Secondly,companies in the “mismatch” sector occupy a large number of financia l resources and thus have “crowd-out” effects on other sectors,which in turn exacerba tes “structured” financing difficulties in other sectors.Enterprises in the “mismatch” do main have low productivity and over-investment,while other companies have high pro duction efficiency but face severe financing constraints.The real economy will inevita bly be transformed and upgraded under the mismatch of financial resources in the ban king system.If the “mismatch” continue to exist,the real economy has a possibility o f falling into the industry's low-end lock.In the end,companies in the “mismatch” domain have a net asset effect,couple d with a “double” credit advantage under direct government subsidies or implicit guar antees,thus no matter whether the monetary policy is loose or tight,the financial reso urces of the banking system will give priority to companies in these "mismatch" areas.Only when the financing needs of companies in the “mismatch” domain are met,the financial resources of the banking system will flow to other companies.Under the above conduction path,the implementation of monetary policy will fa ce a "dilemma" dilemma: when the tightening of the currency and raising the cost of capital suppresses the "over-investment" of the mismatch industry,the mismatched fina ncial resources industry has a "double" credit advantage.,and can withstand high inte rest burden,in fact,the impact is less,but those areas with higher productivity but do not have credit advantages first affected;when you take to relax the money,reduce interest to support the real economy in the area of urgent need for development,the n again It may further blow up the bubble in the mismatch of financial resources and lay a bigger hidden danger for the future.The "distorted" nature of the imperfect credit market and the risk-return characte ristics of some government-backed enterprises is the source of the mismatch in the fin ancial resources of the banking system.The commercial bank is based on information asymmetry and this distorted risk-return structure.The choice of “rationality” must be the financial resources owned by the “mismatch” itself.In order to fundamentally sol ve the problem of misallocation of financial resources,it is necessary to further impro ve the credit market;on the other hand,it is necessary to clarify the margins of gove rnment intervention and eliminate all kinds of unreasonable government intervention.S pecifically:(1)Reduce the asymmetry of information by constructing a sound credit informa tion query platform and improving the risk identification capabilities of the banking in dustry,so that commercial banks' credit decisions are based on the most accurate and deterministic information;(2)Straightening out government intervention margins by eliminating government invisible guarantees and hardened budget constraints,and then “correcting” the risk c haracteristics of some of the financing entities that are distorted.In addition,China's banking industry structure also has system deficiencies,maki ng China lack of financial institutions specialized in small and medium-sized enterprise s-small and medium-sized banks.Small and medium-sized banks have the advantage s of short information transmission chain,low organizational structure(Berger,1998),and low agency costs of grass-roots credit managers(Berger,2002).They have compa rative advantages that large banks cannot compare with services for small and medium-sized enterprises.It is also necessary to point out that it is also easy for many scholars to overlo ok the impact of asset bubbles on the misallocation of financial resources in commerc ial banks.Asset bubbles can not only affect the allocation of financial resources amon g different companies by distorting the risk-return characteristics of some financiers.Itwill cause financial resources to flow from the real economy sector to the already pr osperous real estate market,which will lead to insufficient allocation of productive inv estment.Therefore,it is necessary to eliminate asset bubbles through the regulation of real estate and further correct the mismatch of financial resources of commercial ban ks caused by asset bubbles.Under the current background of "supply-measurement" reform and financial "del egation",this paper attempts to analyze and analyze the typical performance of financi al resources misallocation of commercial banks,their causes,and their impact on the macroeconomic and monetary policies.Explore and find solutions to solve the mismat ch of commercial banks' financial resources,so as to provide some useful lessons for the reform of China's financial system and the optimal allocation of financial resource s.The main conclusions of this paper are:(1)One of the key reasons for the curr ent "disconnected" between China's financial and real economy lies in the mismatch of financial resources in the banking system;(2)The imperfections in the credit market and government intervention are responsible for the current financial resources in Chi na With the underlying causes,the credit market's imperfections lead banks to fail to understand the risk-return characteristics of corporate projects,and then they can only deploy financial indicators that include the corporate net assets and the credit market i mprovement of their industry.Resources,and government intervention can affect the si ze of this indicator,thereby affecting the allocation of credit funds.(3)Economic stim ulus policies after the international financial crisis strengthened the local government's intervention in the economy,which in turn led to the distortion of the characteristics of risk and returns of some enterprises.Under “reasonable” choices,banks allocated cr edit resources to the “credit advantage” department.Caused overheating of these indust ries,and the government's macro-control has further led to a series of non-benign fin ancial innovations in commercial banks,which eventually led to the rapid development of shadow banking in China.(4)Misallocation of financial resources to the current r eal economy and Monetary policies all have an impact.Specifically,the misallocation of financial resources has led to the accumulation of financial risks in the “mismatch”field,which has caused difficulties in the transformation and upgrading of China's industrial structure,and also has led to a dilemma in monetary policy.The main contributions of this study are:(1)Starting from the most pressing rea lity facing the current economy—the disconnect between finance and the real economy and the intensification of mismatching financial resources,through systematic and indepth research,we try to find solutions to the problem.Countermeasures.(2)By synt hesizing current research results at home and abroad,it breaks through the limitations of a single theoretical explanation and attempts to grasp the performance,formation re asons,influence,and governance of commercial banks' financial resources mismatches by establishing an overall analysis framework.(3)In-depth analysis of the impact of mismatching financial resources on the industrial structure and the reasons for unsatisf actory results of various policy measures.and proposed a series of policy recommenda tions to address financial mismatches in the banking system.