The Impact Of Money Supply On China's Corporate Bond Spreads

Since the reform and opening up,China has formed a financing system based on the commercial bank credit,and bank credit has become one of the most important ways of corporate financing.However,with the financial disintermediation,the deepening of the interest rate marketization and the gradual development of the capital market,the direct financing development and the increase in the proportion of direct financing have been increasingly included in the key areas of the deepening of the financial system reform.In the capital market,enterprises can choose to issue stocks or bonds to finance.Bonds,as an important direct financing method,also provide considerable financial support for the development of entities.In the process of issuing debt financing,the price or interest rate of bonds is a factor of great concern to the enterprise.This is directly related to the amount of the company's future principal and interest payments,which in turn will affect the weighted capital cost of corporate financing.The spread refers to the amount of the bond interest rate issued by the company and the risk-free rate of the same period.This difference is usually determined by the macroeconomic situation,the micro factor of the enterprise and the individual factors of the bond.The macroeconomic situation,especially the level of money supply,will have an important impact on the operation of the company and directly determine the level of various interest rates in the financial market.The business situation of the enterprise itself and the interest rate of the financial market it faces ultimately determine the level of corporate bond interest rate and even the spread.At present,China's central bank continues to adopt a prudent monetary policy,and the money supply has remained tight and moderate,creating a good monetary policy environment for China's economic restructuring and corporate financing,especially for SME financing.The impact of alteration in the money supply on the bond spreads is focused on in this paper in the macroeconomic situation,and selects the difference between the publicly issued corporate bond interest rate and the risk-free interest rate as a representation of the spread.Firstly,I read and researched the relevant literature about the credit spread of corporate bonds,and then the empirical model was constructed by selecting relevant variables for regression analysis.Specifically,the indicators such as the money supply,the nature of the issuer's property rights,and the strength of the lead underwriter are selected as the main explanatory variables;and more than ten indicators in the macroeconomic level,the micro level of the enterprise,and the individual factors of the bond are selected as the control variables.Perform multiple regression analysis.The research logically performs regression analysis on the full sample data,grouped according to the property rights,and grouped according to the underwriters'strength.Finally,it is concluded that the change in the money supply does have an impact on the spread of the company's bond issuance,and the money supply is negatively correlated with the corporate bond spread.The larger the money supply in the first period,the better the current period.The difference is smaller.In the group empirical evidence,the spread of the bonds issued by different types of bond issuers has different performance results than the level of money supply of the first phase.Specifically,when grouping according to the nature of property rights,we find that corporate bond spreads of non-state-owned bond-issuing companies are more sensitive to changes in money supply;when grouping according to the strength of lead underwriters,we find weaker owners.The spread of corporate bonds underwritten by underwriters is sensitive to changes in the money supply.Finally,the research concusions are sorted out,and corresponding policy recommendations are put forward based on the empirical rcsults.