Economic Policy Uncertainty,Interest Rate Regulation And Non-Financial Corporate Shadow Banking

In recent years,the tendency of China’s real economy to "transform the economy from substantial to fictitious" has received widespread attention,and there are various ways for enterprises to financialize,one of which is to participate in shadow banking.The current research on the motivation of shadow banking behavior of non-financial firms can be summarized into three types: demand and supply,profit maximization,and investment substitution.Against the background of financing constraints faced by SMEs in general,financing out companies face a higher demand for financing in the financial market,and the profitability of various types of financial investments is higher than the ordinary business activities of enterprises,non-financial enterprises are increasingly attracted to engage in shadow banking activities.Before the deregulation of the lending rate floor,the "ownership discrimination" of banks made SOEs easy to overcapitalize and become participants in shadow banking activities;while after the deregulation of the lending rate floor,the competition among banks made some non-SOEs with good profitability and creditworthiness have more opportunities to raise funds and then join shadow banking.Therefore,this paper takes the interest rate regulation perspective as an innovative point to study the shadow banking behavior of non-financial firms based on the heterogeneity of property rights.In studying the relationship between the two,this paper also explores the effects of economic policy uncertainty,financing constraints,main business profitability,and firm size on firms’ shadow banking behavior.The paper bases its analysis on the theories of bank ownership discrimination,financial disincentive theory and financial deepening theory related to interest rate regulation,real options theory,financial frictions theory and precautionary savings theory related to economic policy uncertainty.This paper constructs a double-difference model based on the difference in the nature of property rights with a sample of listed A-share companies in Shanghai and Shenzhen from 2007 to 2020,and 2013,the year in which the deregulation of the lending rate floor occurs,as the policy year.Based on the results of the underlying regressions and further analysis,the following conclusions can be drawn: 1.Deregulation of the lending rate floor will promote significant growth in the size of shadow banking for listed non-SOEs;2.Elevated economic policy uncertainty and increased financing constraints will weaken the above promotion effect;3.Non-financial listed companies with low main business profitability and large scale are more willing to participate in shadow banking.