Research On The Relationship Between Inventory,Leverage And Financial Fragility Of Real Estate Enterprises

As China’s economy shifts to a stage of high-quality development,a stable financial environment is crucial.On the one hand,economic transformation requires the healthy development of the real estate industry,and the high inventory and high leverage of Chinese real estate companies are an main source of financial risks in China.On the other hand,the cooling of the real estate industry has increased the non-physical investment of real estate enterprises,which has also had some impact on my country’s financial fragility.Therefore,this paper examines the impact of real estate enterprise inventory,leverage and financial assets ratio on my country’s financial fragility.For the sustainable development of real estate industry and economy in China,this paper takes A-share listed real estate companies from 2002 to 2021 as the research object,starting from three aspects of inventory,leverage and financial assets,using a combination of theoretical analysis and empirical analysis method to explore the impact of real estate enterprises on financial fragility of China.The study found that the increase in inventory growth and the asset-liability ratio excluding advance receipts reduces financial fragility in the short run but increases it in the medium and long run;while the increase of the proportion of financial assets has little impact on China’s financial fragility;during the rapid growth in the real estate industry,the three explanatory variables have little impact on financial fragility;in recent years,China’s real estate industry has entered a stage of improving quality and slowing down,and all three explanatory variables have a greater impact on financial fragility,and financial fragility recovery after shock becomes slower.Therefore,from the perspective of sustainable and healthy development,real estate enterprises should accelerate the process of reducing inventory growth and excluding the asset liability ratio of advance receipts,so as to reduce their financial risks;Because the proportion of financial assets of real estate enterprises has little impact on China’s financial vulnerability,its financial investment needs to be limited according to the scale of real estate enterprises.This paper also divides real estate enterprises into three categories,large,medium and small,according to their asset size,and examines their contribution to China’s financial fragility.The results show that the inventory growth rate of medium-sized housing companies has the greatest positive impact on financial fragility;the assetliability ratio excluding advance receipts of large housing companies has the greatest impact on financial fragility,followed by medium-sized housing companies,and the smallest of small housing companies;The increase in the proportion of financial assets of small real estate enterprises will increase financial fragility,but under the negative influence of large and medium-sized real estate enterprises,all real estate firms has little impact on financial fragility.Therefore,the regulatory authorities should strictly control the inventory of medium-sized real estate enterprises;Introduce different restrictions on the asset liability ratio excluding advance receipts of real estate enterprises of different sizes;Limit the proportion of financial assets of small real estate enterprises.In order to provide data support for real estate enterprises,threshold autoregressive models are used to test real estate enterprises of different sizes.The research conclusions are as follows:(1)The inventory growth rate of small housing enterprises should be less than 6.24%,the asset-liability ratio excluding advance receipts should be greater than 59.66%,and the proportion of financial assets should be kept above12.5%.(2)The optimal interval of asset-liability ratio excluding advance receipts for medium-sized housing enterprises is [0.6916,0.8187],and the proportion of financial assets should be less than 12.35%.(3)The asset-liability ratio of large real estate companies excluding advance receipts should be lower than 1.011,and the proportion of financial assets should be less than 7.93%.The conclusion of the paper provides a reference for real estate enterprises to make management decisions,which is conducive to reducing financial risks,promoting the de-financialization of real estate,and accelerating the supply-side structural reform of the housing market.