| Since the Reform and Opening Up,the Central Economic Work Conference and the Report on Government Work over the years have all emphasized "deepening the reform of the financial system,broadening the financing channels for enterprises,and effectively solving the problem of difficult and expensive financing for enterprises".In February 2019,the political bureau of the CPC central committee held the 13 th group study session,stressing once again that "we should deepen financial reform and opening up,strengthen the ability of financial institutions to serve the real economy,resolutely combat major risks,including financial risks,and promote the sound development of China’s financial sector." In the context of the economic globalization,Two-way open in capital markets,cross-border financing gradually let go,the enterprise how to seize the two markets at home and abroad,two kinds of resources,doing moderate foreign debt financing,alleviate the enterprise financing difficulties,reduce the enterprise foreign exchange risk,to ensure sustained and stable development of enterprises,is one of the most important aspects of enriching enterprise financing,broadening the financing channels,preventing and defusing the major financial risks.In recent years,the National Development and Reform Commission jointly with the State Administration of Foreign Exchange gradually opened up domestic institutional cross-border financing limit(with the exception of real estate enterprises and local financing platform),allowed the market main parts to borrow freely within the scope of the financing risk weighting balance,canceled the prior scale approval process,and implement the free settlement of exchange system for external debt funds,improve the convenience of foreign debt financing and debt capital benefits.Chinese enterprises use a large amount of foreign currency-denominated debt in foreign trade and financing,and the trend is increasing year by year.From the perspective of industry distribution,the main parts of foreign debt financing has expanded from the traditional real estate industry to the emerging industries such as leasing industry,financial services industry and public utilities.Accordingly,the enterprise foreign debt scale is expected to continue to increase.Foreign currency-denominated debt research originated from Latin America currency crises and southeast Asia financial crisis,emerging market countries lack of capital,borrow into the excessive foreign currency-denominated debt from the United States and other developed countries,once the devaluation,debt service burden have serious impact on the stability of domestic financial system,and even trigger a financial crisis,has had a negative effect on national economic output for a long time.As a result,foreign currency-denominated debt was once considered the "Original Sin" of the financial crisis.However,the country’s excessive foreign currency debt at the macro level is mostly used to finance micro enterprises.Since then,Scholars began to study the motives and economicconsequences of foreign currency-denominated debt financing for micro enterprises.In terms of motivation,scholars generally believe that hedging foreign exchange risk is the primary motivation for foreign currency-denominated debt financing.The second is to obtain the interest rate spread and exchange rate spread,that is the speculative arbitrage motive;Financing needs such as foreign trade payments are also a reason for foreign currency-denominated debt financing.In terms of economic consequences,these papers mainly study the balance sheet effect of foreign currency-denominated debt against the background of the Latin American crisis and the Asian crisis,which led to the sharp depreciation of local currency.In other words,the depreciation of local currency led to the increase of the burden of repayment of principal and interest of foreign currency debt,thus reducing the capital expenditure of enterprises.The research objects are mainly developed countries such as Europe and America and developing countries such as Malaysia,Brazil,South Korea and Chile.Domestic researches on foreign currency-denominated debt are less,starting late.Part of the studies adopt the pure normative research method to analyze the foreign debt management and risk prevention at the national level.At the same time,some scholars also studied the causes of foreign exchange loan growth and foreign debt risk prevention based on specific industries or regions.A few scholars have paid attention to the role of foreign exchange risk management in foreign debt financing,but lack of research on the mechanism of action.A large sample data test based on foreign currency-denominated debt information of China’s A-share listed companies is even more rare.As an emerging capital market country,China is different from western developed countries and developing countries such as Malaysia,Brazil,South Korea and Chile in terms of cross-border capital control,exchange rate liberalization mechanism reform and capital market development,so it may be different from them in terms of financing motives and economic consequences of foreign currency-denominated debt of enterprises.It is of great theoretical and practical significance to systematically study the motivation of the foreign currency-denominated debt financing for Chinese enterprises and its influence on the foreign exchange risk level and investment level of enterprises.Based on this,this paper took China’s A-share non-financial listed companies as samples,manually collected data related to foreign debt financing,and systematically studied the motivations and economic consequences of China’s enterprises’ foreign debt financing.Firstly,the motivation of foreign currency-denominated debt financing of Chinese enterprises is theoretically analyzed and then a large sample test is conducted.On this basis,the paper studies the influence of foreign currency-denominated debt financing on enterprises’ foreign exchange risk level and its mechanism.Finally,the paper studies the influence of foreign currency-denominated debt financing on the investment level of enterprises,as well as the changes of the above influence under the background of two-way fluctuation of RMB exchange rate in China,including the action mechanism.Inorder to avoid the influence of different external debt financing motives of companies from different industries,macroeconomic factors such as value-added rate of GDP and inflation on foreign currency debt financing of companies,all regressions in this paper were controlled in years and industries.At the same time,in order to overcome the heteroscedasticity and sequence correlation in the process of OLS regression,the standard error of all regression coefficients in this paper was adjusted by clustering at the company level.The main research contents and conclusions of this paper are as follows:First,the paper studies the motivation of foreign currency-denominated debt financing of Chinese enterprises.The study found that: the more foreign currency assets or overseas income an enterprise,the larger the interest rate spread between local and foreign currencies,and the higher the financing demand,it is more likely to integrate foreign currency debt,and the larger the foreign debt financing scale will be.It indicates that the enterprise borrows foreign currency-denominated debt for hedging foreign exchange risk,speculative arbitrage,and meeting financing needs.The above conclusions still exist after changing the measurement method of the independent variable,the lag period of the independent variable,only considering US dollars debts,deleting the non-standard year of foreign debt information disclosure from 2010 to 2013,and considering the robustness test of RMB conversion from appreciation to depreciation against US dollars in 2015.Further research shows that enterprises’ foreign currency debt financing does reduce their financial expenses(interest expense and exchange profit and loss),which indirectly proves that the interest rate parity theory is invalid or untenable in the real market.Enterprises can obtain both interest rate spread and exchange difference returns,and the speculative arbitrage motive is further confirmed.Second,the paper studies the influence of foreign currency-denominated debt financing on foreign exchange risk level of enterprises.It is found that the larger the foreign currency-denominated debt financing scale,the lower the foreign exchange risk level of enterprises.It shows that foreign currency-denominated debt financing of Chinese enterprises plays a role in foreign exchange risk management,effectively reduce the depreciation risk of foreign assets,and foreign debt financing driven by speculation and arbitrage motivation does not increase foreign exchange risk for enterprises.The above results still exist after a series of robustness tests,such as changing the measurement method of dependent variables,using double clustering robust standard error,deleting the year of exchange rate crash of "811 exchange rate reform" and using treatment effect model to solve the endogenous problem.Further research shows that the reduction effect of foreign currency-denominated debt financing on enterprises’ foreign exchange risk is mainly reflected in large scale companies and export-oriented companies,the companies with good internal control quality,fierce external product market competition and with older senior executives,higher education,and better financial background.The possible reason is that these companies are faced with greater foreign exchange risks and have moreinternal and external resources to deploy,so they are more motivated and able to conduct effective foreign exchange risk management.Thirdly,the influence of foreign currency-denominated debt financing on enterprise investment level is studied.It is found that the larger the foreign currency-denominated debt financing scale,the higher the level of enterprise investment.It indicates that foreign currency-denominated debt financing meets the financing needs of enterprises and improves the investment level of enterprises.At the same time,influenced by the fluctuation of RMB exchange rate,the influence of foreign currency debt financing on enterprise investment level changes accordingly.Specifically,during RMB appreciation,the expansion effect of foreign currency debt on enterprise investment level is not significant,while during depreciation,the contraction effect of foreign currency debt on enterprise investment level is significant.The results remained robust after changing corporate investment levels,foreign currency debt financing measures and controlling potential endogenous problems.Further,the tightening effect in depreciation period mainly reflects in the more likely affected by exchange rate fluctuations,such as enterprise groups with unused foreign-exchange derivatives,as well as the external shocks are more likely to get into financial strain,such as companies with high degree of financing constraints and fierce product market competition.While cash flow is the intermediary variable between the foreign currency debt financing and corporate investment level.Finally,according to debt maturity structure of the foreign currency debt,short-term foreign currency debt and long-term foreign currency debt are separated,the study found that the expansion effect of short-term foreign currency debt and long-term foreign currency debt during the appreciation on firms’ investment is still not significant,during depreciation period,the deflationary effect of short-term and long-term foreign currency debt on the level of corporate investment are significant under 5% level,but the coefficient of long-term foreign currency debt is larger,thus long-term foreign debt crunch effect is stronger from an economic sense.This paper systematically and deeply studies the motivation of foreign currency-denominated debt financing for Chinese enterprises and its corresponding economic consequences.The possible contributions are as follows: first,foreign currency-denominated debt is an important part of corporate debt and capital structure,which is different from the existing research about debt instrument structure and debt maturity structure.From the perspective of debt currency heterogeneity,this paper innovates the research perspective of traditional capital structure theory and expands the research horizon.Second,the paper found that foreign currency-denominated debt financing reduces the enterprise foreign exchange risk,improve the level of the enterprise investment,but when the currency devaluation occurs,the tightening effect on investment level of the enterprise arise.So this research enrich the factors of the enterprises foreign exchange risk level and the enterprises investment level,provide evidence and referencefor improving the rational use of foreign currency debt financing for the enterprise,the effective management of foreign exchange risk and raising the investment level;Third,this paper is the first to use the large sample of A-share listed companies in China to examine the motivation and economic consequences of foreign currency debt financing of enterprises,which is in contrast to the previous research results based on the sudden monetary(financial)crisis in Latin America and southeast Asia,enriching the empirical evidence from emerging capital market countries.Fourth,this paper considers the impact of RMB exchange rate fluctuations and constructs a theoretical analysis framework from macro policies(exchange rate changes)to micro subject decision-making(foreign debt financing and capital expenditure),which is conducive to analyze the transmission mechanism of macro policies on the micro level and providing micro decision-making basis for macro policy research. |
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