Research On The Efficiency And Risk Management Of Companies' Participation In Banks

With the reform and development of my country's industry and financial industry,for a period of time,the integration of industry and finance has become an effective way to improve the efficiency of corporate capital operations,reduce transaction costs and information asymmetry,and has also become an important development strategy for large enterprise groups to achieve diversification.The two operating modes of "from industry to finance" and "from finance to industry",which penetrate each other and complement each other,have become important explorations in the process of my country's economic system reform.This kind of exploration,which started in the1980 s,was originally intended to fully learn from the practice of industry-finance integration in developed market economies and explore ways to broaden the capital replenishment channels of my country's commercial banks to meet the regulatory requirements of the Basel Agreement on capital adequacy ratios.Since then,in the process of reform and development for more than 30 years,my country has gradually formed a policy practice of "from industry to finance",which has greatly enhanced the vitality of corporate investment,promoted the coordinated development of industrial capital and financial industry,and meets the regulatory requirements for capital adequacy in the banking industry and improves corporate efficiency.However,with the impact of risks and changes in the internal and external environments,the policy practice of "from industry to finance" has recently seen a phenomenon of accumulation of risks,which has even induced serious financial risks.For example,Baoshang Bank Limited was emptied by the "Tomorrow Department" and became the cash machine of the "Tomorrow Department" enterprises,eventually inducing serious credit risks.In 2018,the regulatory authorities issued targeted financial regulatory documents to regulate corporate investment in domestic financial institutions,prevent cross-risk contagion,and promote the sound development of enterprises and financial institutions.Recalling the historical practice of the coordinated development of Chinese enterprises and the banking industry,while fully affirming that corporate funds enter the banking industry to improve operational efficiency,it is also appropriate to reflect on the formation of risks in this process,and how to correctly recognize the efficiency improvement and frequent risk events.It is a rather difficult subject at the level of theoretical research and financial practice.Based on this,this article focuses on the scientific assessment of the effectiveness of corporate equity participation banks and the risks of this era.in order to improve the effectiveness of corporate equity participation banks in my country,effectively standardize corporate equity participation banking behavior,prevent risks in the integration of industry and finance,and achieve a healthy and sustainable real economy.Growth provides a useful reference.It is hoped that the research in this article can provide a useful reference for improving the efficiency of corporate equity participation in banks in my country,effectively regulating corporate equity participation in banks,preventing risks in the integration of industry and finance,and achieving healthy and sustained growth of the real economy.This article starts with preventing the risks of Chinese companies' equity participation in banks.Based on the current characteristics of frequent risk events after the company's equity participation in banks and the cross-contagion of risks between entity companies and financial enterprises,this paper sorts out the motivations for the company's equity participation in banks,the mechanism of the effectiveness of the company's equity participation in banks and The mechanism of risk generation establishes the theoretical basis for the effectiveness of the company's equity participation in banks and its risk management,and expands the economic interpretation of the effectiveness of the company's equity participation in banks and its risk management.It reviewed the development history of Chinese companies' equity participation in banks,clarified the motivations for Chinese companies' equity participation in banks,and selected the data of non-financial listed companies from2008 to 2018 to analyze the status quo and problems in both easing constraints and improving efficiency after Chinese enterprises' equity participation in banks.On the basis of theoretical combing and status analysis,using the data of non-financial listed companies from 2008 to 2018,the mixed effect panel regression,Probit,Tobit and other methods are used to empirically analyze the impact of corporate equity participation banks.The impact of corporate financing constraints,on the other hand,verifies the impact of corporate equity participation in banks on corporate investment efficiency.While my country's corporate equity participation in commercial banks has improved efficiency,many risks have also arisen.This article analyzes the risks of related-party transactions,the risks of cross-contagion between entity companies and financial companies,and analyzes Baoshang Bank Limited as a typical case.This article explores the causes of risks and their harms.Finally,it summarizes the conclusions of the full text,and puts forward policy suggestions on strengthening the risk management of Chinese corporate equity banks from two aspects: improving the corporate governance of commercial banks and strengthening external supervision.The innovation of this article is embodied in the following three points:First,based on the literature review,combined with the actual situation of Chinese companies' equity participation in commercial banks,it reveals the economic consequences of the company's equity participation in banks.On the one hand,it can improve the effectiveness of equity participation companies,and on the other hand,it will also generate greater risks.Corporate equity banks ease the financing constraints of enterprises through three channels: intermediary effect,synergy effect and bank-enterprise linkage effect.The mechanism by which the company's participation in banks affects investment efficiency is reflected in the following: First,when the financing constraints faced by the company are relatively small,relatively abundant endogenous funds will cause the company's managers to overconfidence and increase the scale of investment in pursuit of greater profit margins.And under this circumstance,companies are prone to over-investment,which leads to a reduction in the efficiency of corporate investment.The second is that when the financing constraints faced by the enterprise are relatively large,the funds available to the enterprise will be reduced accordingly,and the priority disposable funds will cause the enterprise to miss many investment projects with higher expected returns,and lead to a reduction in investment efficiency.When the enterprise eases the financing constraints,it will avoid missing the investment projects with higher income,and then improve the investment efficiency.Third,the reduction in the amount of corporate funds caused by financing constraints,from another perspective,can prompt companies to strengthen the screening of investment projects before investing,choose projects with greater investment value,and further strengthen the management of investment projects,thereby improving investment efficiency.Therefore,this article believes that financing constraints can affect the investment efficiency of enterprises.After the company participates in a bank,there are two main risks,namely the risk of connected transactions and the risk of cross-contagion between entities and finance.Second,through the historical analysis method,the development process and motivations of China's participating banks are systematically sorted out.At the same time,the mixed effect panel regression,Probit,Tobit and other measurement methods are used to reveal the heterogeneous impact of corporate equity participation in the improvement of efficiency.After enterprises hold bank shares,the degree of financing constraints is significantly reduced.At the same time,the nature of corporate ownership,national macro policies,regional development and business environment play a regulatory role in the process of alleviating financing constraints.Participating banks can significantly alleviate the loss of investment efficiency caused by financing constraints.Third,through the case analysis of Tomorrow Group's equity participation in Baoshang Bank Limited,it is revealed that the risk generation mechanism of corporate equity participation in banks lies in four aspects: irregular market order,instability of corporate finance,imperfect corporate governance of the bank,and failure of external financial supervision.The risks of the integration of industry and finance have the characteristics of strong concealment,destructiveness and periodicity.While harming the legitimate rights and interests of small and medium shareholders,it is easy to induce regional financial risks.This article systematically sorts out the whole process of Baoshang Bank Limited's risk events by dissecting sparrows,reveals the main reasons for the risks of industry-finance integration,and provides reference for the effective prevention and control of financial risks.