Research On The Impact Of Enterprise Financialization On Leverage Ratio

After the global financial crisis in 2008,China implemented loose monetary policies,which led to the continuous increase of total liabilities and the soaring leverage ratio.High leverage initiates enterprises debt risk and exacerbates market turmoil.At the same time,under the background that the real economy is declining while the profit of the fictitious economy is rising,enterprises are more and more inclined to invest in financial assets.There is an obvious trend of enterprise financialization,which will lead to the decline of entity operation and the imbalance of China’s economic structure.Therefore,the coexistence of high leverage and enterprise financialization needs to be paid more attention.The existing research results show that the conclusion of the relationship between enterprise financialization and leverage ratio is inconsistent.Through the analysis,it is found that the allocation of financial assets under different motives will have a differential impact on the leverage ratio of enterprises,and then analyze the impact mechanism according to relevant theories.In addition,there are obvious differences in the leverage ratio and financialization of enterprises in different life cycles.Study from the perspective of enterprise life cycle can help enterprises reasonably allocate financial assets and adjust the leverage ratio.In the empirical research,I build a local adjustment model in the target capital structure,then introduce two explanatory variables(the share of financial assets and the profit proportion of financial assets),choose to build a two-way fixed response model,and finally make an empirical analysis of the heterogeneity about life cycle.The conclusions are as follows: 1.The share of financial assets significantly reduces the leverage ratio of enterprises.The characteristics of strong liquidity and cashability of financial assets weaken the external financing demand of enterprises and reduce the leverage ratio.2.The profit proportion of financial assets significantly increases the leverage ratio of enterprises.Financial assets have high profitability.Driven by interests,enterprises obtain external financing to invest in financial assets,so as to increase leverage.3.Enterprise financialization has different effects on the leverage ratio of enterprises in different life cycles.About enterprises in the recession period,only the share of financial assets has a remarkable impact on the leverage ratio,while the both effects of other life cycle enterprises are significant,but degree of influence is different.Among them,the start-up enterprises are the most affected by the share of financial assets,and the mature enterprises are the most affected by the profit proportion of financial assets.Based on the above conclusions,this paper finally makes proposals: Control the allocation proportion of financial assets and improve the risk management level;Prevent the arbitrage motivation of financial assets and guide enterprises to return to main business;Reasonably allocate resources and adjust the leverage ratio in combination with the enterprise life cycle;Strengthen the supervision of financial asset allocation and improve the market exit mechanism.