Enterprise Financing Choice And The External Financing Environment

China is in the economic transition period, listed companies in china are facing both the external environment and the inner governance mechanisms. Because of system defects and the unsound management mechanism, corporate finance is running the low efficiency of financing markets and the low efficiency of the allocation of resources, resulting in a waste of financial resources.Commercial bank loans and credit business are the two important financing ways. In developing contries, Enterprise financing choice more commercial credit instead of Commercial bank loans to ease tensions of funds. The reason is that these areas due to the lack of information intermediary organizations, information asymmetry, increased financing costs of bank lending, commercial credit have become the alternative financing methods.This paper bases on the theory of transaction cost, sample on China's listed companies in 2001-2004, empirical tests relations between bank credit and commercial credit used by enterprise financing, as well as external financing environment's impact on enterprise financing. Results showed that the commercial credit financing and bank loans financing have the significantly substitution effect, and, in the lower level of the financial market and financial corruption in the higher levels, due to the high cost of financing loans ,alternative effect is stronger. This study concluded that enterprises under different external financing environment and regulate can automatically change their financing structure and financing ratio, thus minimizing the cost of financing.