Research On The Influence Of Administrative Examination And Approval Reform On Financing Constraints

Since the 18th National Congress of the Communist Party of China,the state has vigorously carried out the reform of "deregulation,management and service",gave full play to the decisive role of the market in the allocation of resources,got rid of the institutional drawbacks that restrict the decisive role of the market in the allocation of resources,reshaped the relationship between the government and the market,reduced the government’s intervention in the allocation of resources,stimulated the vitality of the market,and gave play to the advantages of the market in promoting competition.Most resources in China are monopolized and planned by the government.Firm and individuals who want to obtain resources must apply for approval.Complex approval procedures and lengthy approval periods directly lead to the inefficiency and ineffectiveness of resource allocation.Administrative examination and approval restricts the vitality of the market to a great extent.Therefore,the reform of administrative examination and approval is very important to give play to the decisive role of the market in resource allocation.In order to eliminate the interference of the old examination and approval system to the new system,since the late 1990s,Shenzhen,Xiamen and other places at the forefront of reform and opening up have taken the lead in starting the reform of the administrative examination and approval system.The reform of the administrative examination and approval system focuses on the following aspects:canceling examination and.approval,relaxing examination and approval,standardizing examination and approval,innovating examination and approval,and reducing the number of examination and approval items and simplifying the examination and approval process by establishing administrative examination and approval centers in local cities.The reform of administrative examination and approval has led to a substantial reduction in the number of administrative examination and approval,which has greatly stimulated market vitality and improved the efficiency of examination and approval.The reduction of examination and approval procedures and time reduces the institutional cost of firm entry and helps firm enter the market.The increase in the number of firm intensifies the competition among firm.The intensification of product market competition will bring pressure to firm in all aspects.The fierce product market competition can effectively intensify and restrict insiders,which is bound to have an impact on the daily operation of firm.Capital is an important factor for the survival and development of an firm.Therefore,whether it can obtain sufficient capital is the key to the survival and development of an firm.When the internal capital of an firm is insufficient to meet the development,it needs to obtain capital through financing.However,a large number of studies show that most firm in China are faced with financing constraints,which seriously limits the survival and development of firm.Therefore,financing constraint is an urgent problem to be solved.At present,the academic circles generally believe that the direct cause of financing constraints is the existence of information asymmetry and agency problems.The fierce product market competition generated by the administrative examination and approval reform can effectively intensify and restrict insiders,so that managers can improve the level of information disclosure and reduce the degree of information asymmetry,so as to alleviate the financing constraints of firm.Therefore,based on the above background,this thesis discusses whether the implementation of administrative examination and approval reform will reduce the level of financing constraints of firm.Further,considering the impact of firm heterogeneity,this thesis selects two variables:the size of the company and the nature of property rights to explore whether the impact of administrative examination and approval reform on financing constraints is different in small and medium-sized firm and large firm,state-owned firm and private firm.Taking the establishment of local administrative approval centers as a "quasi natural experiment",using the data of Shanghai and Shenzhen A-share listed companies from 2000 to 2020,this thesis constructs a multi period DID model to evaluate and explore whether the administrative approval reform will alleviate the financing constraints of firm.Further,considering the impact of different property rights and firm sizes,this thesis uses group regression to explore the impact of administrative approval reform on financing constraints in state-owned and private firm Whether there are differences between small and medium-sized firm and large firm.The results show that:(1)the administrative examination and approval reform eased the financing constraints of firm.(2)Compared with state-owned firm,the easing effect of administrative examination and approval reform on financing constraints is more significant in private firm.(3)Compared with large firm,the administrative examination and approval reform has a more significant role in easing the financing constraints in small and medium-sized firm.The conclusion of this thesis is proved to be robust by using placebo test and variable substitution.Furthermore,this thesis conducts a parallel trend test,and the results show that the impact of administrative approval reform on financing constraints is negative and can last for a long time.The main innovations of this thesis are as follows:(1)it enriches the research perspective of administrative examination and approval reform.The reform of administrative examination and approval has not been implemented for a long time,and there is less relevant research literature.The existing literature mainly studies the background,significance and impact of the reform of administrative examination and approval from the perspective of system,while there is less research on the relationship between the reform of administrative examination and approval and micro firm.This topic links the reform of administrative examination and approval with the market entry and financing constraints of micro firm,and explores its internal logical relationship,Thus,it provides a theoretical basis for the economic impact of administrative examination and approval reform,and enriches the research perspective of administrative examination and approval reform and micro firm.(2)It has expanded the mechanism for easing financing constraints.The research on how to alleviate financing constraints at home and abroad has been very mature.A large number of studies have proved that improvin g the external economic environment and optimizing the internal governance structure can effectively alleviate the level of financing constraints.This thesis explores the mechanism of easing financing constraints from the unique perspective of product market competition brought by firm’ entry,and expands the mechanism of how to alleviate financing constraints in the macro institutional environment.