Does Industrial-financial Integration Alleviate Financial Constraints?

The integration of industry and finance is an important approach for enterprise to optimize the allocation of industrial capital and realize the strategic development.Furthermore,it’s an inevitable way for a country’s economy which is reaching a certain stage to achieve economic transformation and upgradation.As China’s financial industry access control gradually liberalized,more and more enterprises choose to invest in financial institutions in order to achieve combination of industrial capital and financial capital.Previous studies have shown that connections between banks and enterprises have impact on business performance.However,with the arrival of mixed financial business era,non-bank financial institutions are playing an increasingly essential role in the process of social capital allocation.In this regard,this paper will put all kinds of financial institutions into consideration.In the meanwhile,this paper will explore the different influence on the financial constraint of a company by holding financial institution shares under the situation of different degrees of financial development which is a macro factor and different nature of property right which is a micro factor.Based on the cash-cash flow sensitivity model proposed by Almeida et al.(2004),this paper takes the cases of non-financial listed companies investing in financial institutions from 2007 to 2014 as the research sample to examine whether holding financial institution shares can significantly alleviate company’s financial constraint.The results show that:(1)Holding financial institution shares can significantly mitigate the financial constraint;(2)Compared to the regions with high degrees of financial development,the mitigation effect of holding financial institutions shares in the lowerdegrees regions is more significant;(3)In general,state-owned companies cansignificantly alleviate their financial constraints by holding financial institution shares,but such effect is not that significant in the higher developed regions.Overall,although the mitigation effect is not significant among private companies,such effect is quite significant in the lower developed regions.The results of this paper not only expand the empirical research on the integration of industry and finance,but also have some reference significance for the enterprises to carry out the integration of industry and financial and the government’s policy on guiding and creating a better integration atmosphere.