Capital Allocation Model's Establishment And Analysis Of Internal Capital Market

Allocation of capital is the core of the whole resource allocation. Capital market provide a platform for financing, promote the capital accumulation, achieve optimal combination and allocation of resources, people tend to emphasize the importance of the external capital market in the financial structure but ignore the internal capital market. In the enterprise groups, the internal capital market plays an irreplaceable role to promote the development of the enterprise . With the advancing of the merger wave, such as reorganization plan of the state-owned enterprises in our country, it will create more huge internal capital markets. So research on internal capital markets has important practical significance.Since Williamson and Alchian proposed the concept of the "internal capital market", the internal capital market theory as a theme at the forefront both at inland and abroad has been researched for decades and made some achievements. Up to now, Internal capital market theory has been more and more recognized in the realm of theory and practice, scholars made profound research around the internal capital market, most of these studies are centered on the existence, efficiency of the internal capital markets and the comparison with external capital markets, which has launched a strong theoretical, but there are rare actual operations which set up these theories. The purpose of this thesis is to set up a financing and investment model upon the previous research result.The framework of this paper is as follows: the first chapter, review the domestic and overseas research result, decide the research purpose and method that implied; the second chapter, introducing the theories of internal capital market in details, including the concept, existence, performance, efficiency theory, and so on.; the third chapter, analyzing the advantage and disadvantage of internal capital market by comparing with external capital market, set up a foundation for the research; the fourth chapter, quantifying the factors that impact the allocation of capital in the internal capital market. Through weighing earnings and cost, build a decision-making model to decide whether to do external financing and determine the scale of the investment; The last chapter, Summarize the different models and the conclusions that refered in the former chapters, in order to take it into practice, and propose a view of the further research of internal capital market..