Shares Of Banks And Companies Short-term Capital Structure

In the area of theory work, prior work, such as pecking-order theory and trade-off theory, on leverage implicitly assumes capital availability depends solely on firm characteristics. The empirical studies based on those theories have focus only on the demand side of the capital of a firm. However, market frictions that make capital structure relevant may also be associated with a firm's source of capital. The source of the capital, from the view of capital supply, does affect the capital structure of a firm. This is the latest research direction in the capital structure study.In this paper, we review the literature about the determinant of a firm's capital structure. Then we make whether a firm holding share of a bank as a variable for capital restriction, describe the development of this phenomenon and discuss the reason and meaning of this. After the panel data regression analysis, we find firms that hold share of a bank have significantly more than 2 percentages less leverage and more than 0.4 percentages more leverage adjustment, even after controlling for firm characteristics that determine observed capital structure.We divide the sample into different sub-samples by size, industry and competition position, and exam the effect of holding the share of a bank for the firm's capital structure in different sub-samples. We find that the firms which are smaller, in more competitive industry or on the bad competition position have been affected more by the phenomenon of holding the share of a bank.At last we explain the reason for our findings through capital resource, cash flow and firm operation. And we also give some advices on how to improve the firm capital structure and restriction.