Research On The Relation Of Credit Structure And Firm Performance

Presently, credit problem of company in china is becoming more and more obvious. Usually, refusing the debt of bank, deceiving the investor, cheating each other and resulting in chain debt. Take PT Shui Xian for example, high debtors make it not to pay the supplier, hence, its business credit drop accordingly, the rank of the company's whole the credit declined subsequently. Finally the banks don't bear to lend and the company's debt exceed the asset, the company falls into a decline. Then it goes to bankrupt and finally was forced to retreat from the stock market. A company with high credit rank will get through the difficulty .but ones lacking credit will easily get financial crisis. So, the credit has important influence on firm performance.But how the credit of a company affects its performance? To settle this question, we should clarify the relation between them. The credit of a company could be classified into business credit, bank credit and stock credit, the three kind credits are interaction, and shape the structure of firm credit. According to the object in the market, we also could classify firm performance into market and financial performance. Recently, domestic scholars pay more and more attention to this field, and some have did much research in credit evaluation, credit risk and credit forecasting. But few people do research on credit structure. Some just make qualitative analysis other than quantities analysis. Only several paper concern the relation between credit and performance, but only about special kind of credit and performance.This paper makes analysis on the effect of the whole credit to the firm performance, and tries to find some new rule. Based on former research, we take credit and performance factor as latent variable, and build a conceptual model to illustrate the relations between the factors. Besides, we chose 394 manufacturing company, and make analysis to their market data. At the end, make the hypothesis test to the conceptual model by structural equation model.The result of the test shows, business credit has positive effect on the market and financial performance; bank credit has negative effect on market and financial performance. The stock credit has positive effect to market performance, and inconspicuous effect to financial performance. At the same time, we can make the conclusion that the credit structure of domestic manufacturing company is unbalance, especially the proportion of business credit, bank credit and stock credit. The short term bank credit and stock credit is overfull, and business credit and long term bank credit are comparatively less. This tells us that these companies excessively rely on the short term bank loan and stocks financing, so the increasing financial cost leads to negative effect on the company.