Research On The Impact Of Deleveraging On The Financial Risks Of Real Estate Enterprise

After the outbreak of the financial crisis in 2008,the leverage ratio of China’s real estate industry has generally shown a rising trend.With the rapid development of the real estate industry,the financial risks associated with it are also increasing.Real estate companies are the core strength of China’s economy and have played a huge role in promoting the nation’s social development.In December 2015,the country introduced the policy of "three to one down one up",and deleveraging was first proposed.In 2016,the country officially implemented the deleveraging policy to the high leverage industry.Since then,the deleveraging of real estate enterprises has begun,but is the deleveraging policy bringing positive effects? From the perspective of financial risk,this paper delves into the impact of the deleveraging policy on real estate enterprises starting with the formal implementation of structural deleveraging in 2016,which has certain practical significance.Through a combination of theoretical analysis,empirical research,and case studies,this paper delves into the impact of deleveraging policies on the financial risk of real estate enterprises and its mechanisms.By analyzing the data of China’s A-share listed real estate enterprises from 2007-2021,this paper investigates the impact of deleveraging policy on the financial risk of enterprises using a double-difference model with a view to obtaining valid conclusions.The findings reveal that(1)deleveraging policies can increase the financial risk of real estate enterprises.(2)The deleveraging policy can encourage real estate firms to improve their business conditions and thus reduce their financial risks,but in general,it will increase the financial risks of real estate firms by suppressing both their capital structure and financing structure.In addition,this paper selects Vanke Enterprise Co.,Ltd.as the research object,and focuses on analyzing the impact mechanism of deleveraging policy on its financial risk from the perspectives of capital structure,financing structure,and operating condition,and then clarifies the relationship between deleveraging and financial risk.Based on the results of the analysis,we propose innovative suggestions that real estate companies can reduce their financial risks by improving their capital structure,financing structure and operating conditions under the negative impact of deleveraging policy.