Impact Of Bank-firm Relationship On Chinese Enterprises’ Overseas Under-investment

As one of the external stakeholders of enterprises,banks are the main source of funds for overseas investment of Chinese enterprises.With the increasing pace of overseas investment by Chinese enterprises along the "One Belt One Road" route and other host countries,the importance of the new bank-firm relationship for overseas investment enterprises becomes increasingly important.To this end,this thesis empirically examines the influence and pathways of bank-firm relationship on Chinese enterprises’ overseas under-investment,and discusses the moderating effects of ownership structure and political connection.Firstly,based on the classical theories and literature review,this thesis proposes the corresponding theoretical hypothesis about the influence of bank-firm relationship on the overseas under-investment of China enterprises and its channel and moderating effect:a good bank-firm relationship helps to alleviate the under-investment and improve the efficiency of Chinese enterprises’ overseas investment.A good bank-firm relationship will improve the availability of credit for enterprises and help alleviate the overseas under-investment.The improvement of corporate ownership concentration and circulation has a negative and positive moderating effect on the above effects,and the existence of political connection also has a positive moderating effect.Secondly,this thesis uses the extended Richardson(2006)model to measure the efficiency of Chinese enterprises’ overseas investment,and finds that the efficiency loss of Chinese enterprises’ overseas investment mainly comes from the overseas under-investment.On this basis,this thesis uses two-way fixed effect model to test the influence of bank-firm relationship on the overseas under-investment of Chinese enterprises.Results of Baseline Regression show that enterprises with good bank-firm relationship have significantly reduced the degree of overseas under-investment.That is,a good bank-firm relationship can significantly alleviate the overseas under-investment,which is robust to alternative measures,alternative estimations,and potential endogeneity concerns.Thirdly,this thesis further investigates the channel of the impact of bank-firm relationship on overseas under-investment and the moderating effects of corporate governance.According to the mediating effect model,the former finds that bank-firm relationship alleviates overseas under-investment through the channel of improving the availability of corporate credit(especially long-term credit).Based on the moderating effect model,the latter finds that the improvement of internal ownership circulation and the existence of external political connection will enhance the inhibiting effect of bank-firm relationship on the under-investment,but the ownership concentration of enterprises has no significant effect on this process.Finally,this thesis proposes relevant suggestions about the reshaping and stabilization of the new bank-firm relationship from both government and enterprises perspectives,hoping to help Chinese enterprises improve the efficiency of overseas investment.