Study On The Impact Of Diversification Of Energy Companies On Their Bank Borrowings

At present,China’s economy is in the transition period,from high-speed development to high-quality development,the simple and rough development model can no longer meet the conditions to ensure sustainable economic growth,the economic downward trend is obvious;at the same time,the emphasis on green development,proposed to set the "carbon neutral" target.In this context,the traditional business model of the energy industry has encountered difficulties,and more and more energy companies are diversifying their business in an attempt to explore new profit growth points and maintain their business operations;at the same time,Enterprise development has always been plagued by financing difficulties,and debt financing,especially bank borrowing,has always been an important way for Chinese enterprises to obtain funds.So,can the diversification of energy enterprises enhance their bank borrowing financing ability? What are the ways through which diversification affects the bank borrowing of energy enterprises? Based on these questions,based on previous studies,this paper firstly analyzes the influence mechanism of diversification on bank borrowing financing based on the theoretical basis;then takes the A-share listed companies in Shanghai and Shenzhen in the energy industry as samples,constructs indicators to measure the level of diversification and proxy variables for bank borrowing financing,tests the influence of diversification on bank borrowing financing ability of energy enterprises,and studies how energy enterprises We examine how diversification affects the size and maturity of bank borrowing,and further analyze the impact of diversification on the bank borrowing capacity of energy companies based on the nature of equity and the degree of diversification.After theoretical and empirical evidence,we conclude that: first,in general,energy enterprises can improve their bank borrowing financing capacity through diversification;second,the effect of diversification on their bank borrowing is more significant among non-state enterprises;third,the effect of the degree of diversification of energy enterprises on their bank borrowing shows a marginal decreasing trend.Diversification can help enterprises reduce information asymmetry,diversify business risks,and improve profitability,thus reducing banks’ credit decision risk,which also enhances their ability to obtain bank borrowings.Combined with the results of the empirical tests,it is concluded that diversification causes a greater positive effect on energy companies,which is consistent with the fact that energy enterprises implement diversification strategies on a large scale in the current reality.Based on the results of the empirical study,this paper makes the following suggestions: First,when energy enterprises face bottlenecks in their development,they should actively adjust their strategic business directions and moderately expand their business scope,i.e.,implement diversification strategies to improve their bank borrowing and financing capacity by increasing their operating profits and reducing their operating risks.Secondly,under the situation of rapid development of new energy and restricted development of traditional energy enterprises,energy enterprises can survive the winter by implementing diversified management strategy,especially for non-state energy enterprises,diversified management can bring significant improvement to the bank borrowing and financing ability of such enterprises.Thirdly,energy companies should formulate appropriate diversification strategies,consider their current level of diversification,avoid blind diversification,and maximize the benefits of diversification.