The Impact Of Bank-enterprise Relationships On The Cost Of Corporate Bond

As one of the direct financing methods,bond financing is concerned by the company.But China’s bond market started late and development lag,information asymmetry is a serious problem between bond companies and potential investors.Bond credit risk cannot be disclosure fully and timely,leading investors had to pay a higher cost of information collection in the process of bond investment decision-making,which request a higher risk premium from the issuing company.There is no doubt that the cost of information generated by asymmetric information will affect the company’s bond financing costs.The company usually finances through the indirect financing channel——bank loans before issuing the bonds,by using bank-enterprise relations the company can be easier to obtain bank loans.After establishing a long-term relationship with the bank,the company will not only disclose its real business conditions and financial status to the bank,but also its internal information which public channels cannot get.Obviously,banks know more about the company’s real situation than other external investors.Therefore,bank-enterprise relationships can be used as a sign to identify the risk of corporate bonds and the value of the signal to some extent,alleviate the information asymmetry between the bond company and the investor,which may have an impact on the cost of corporate bond financing.Thus,this paper will attempt to study whether bank-enterprise relations will have an impact on corporate bond financing costs.This article has sorted out the relevant literatures on the bank-enterprise relations and bond financing,proposed hypothesizes which based on the asymmetry information theory,principal-agent theory and signaling theory.Select the corporate bonds which listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange from 2007 to 2015 as a sample.Adopt multiple linear regression models to carry out an empirical analysis between bank-enterprise relationships and the cost of corporate bond financing.The regression result shows that the close degree in bank-enterprise relationships is remarkably negative correlation to the cost of corporate bond financing.Meanwhile,this article has done a packet regression to samples according to credit rating,property rights and financial ecological environment.It shows that the bank-enterprise relationships of bad credit rating corporate can help reduce the cost of corporate bond more effectively than that of bad credit rating corporate.Compared with state-owned enterprises,bank-enterprise relationships have more influence on non-state-owned enterprises on reducing the cost of corporate bond.Bank-enterprise relationships in areas where financial ecological environment is good has a restrained effect on the cost of corporate bond.As to enterprises coming from bad financial ecological environment,the bank-enterprise relationships is remark negative correlation to the cost of corporate bond.The significance of this article is to introduce the bank-enterprise relationship to the analysis on the cost of corporate bond,confirming that the bank-enterprise relationships has a certain influence on the cost of corporate bond,which has a certain theoretical significance and practical significance.