Research On The Impact Of Diversification On Debt Default Risk Of Real Estate Enterprises

As an important component of China’s economy,the issue of industrial debt default in real estate poses a serious challenge to the steady development of the economy and the security of the financial system.As of December 2022,there were 184 bond defaults by real estate companies,with a default balance of 160.91 billion yuan.At the same time,the uncompleted residential building incident caused by the cash flow crisis of real estate enterprises has had an impact on people’s livelihood and bank credit security.In order to stabilize society and economy,the country has introduced a series of policies aimed at supporting the stable and healthy development of the real estate market.Against this background,it is urgent to analyze the risk of debt default of real estate enterprises based on China’s actual situation.Currently,more than 70% of China’s real estate enterprises are diversifying their layout,and the transformation of their development strategies has had a significant impact on the risk of debt default.However,according to the current literature on the issue of debt default by real estate enterprises,it is mainly focused on the discussion of their own factors or external environmental factors in a single case,and rarely analyzed from the perspective of enterprise diversification.Therefore,the article explores the impact of diversification of real estate enterprises on debt default risk,which not only complements existing research,but also provides targeted suggestions for the steady development of the real estate market.Based on relevant literature at home and abroad,this article sorts out the mechanism of debt default affected by diversification of real estate enterprises and proposes corresponding assumptions.Based on the fact that the real estate regulatory policies after 2015 accelerated the diversification of real estate enterprises,the article first analyzes the reality of real estate enterprise diversification and debt default risk from2016 to 2022,and preliminarily tests the hypothesis of the article from a statistical perspective.Secondly,the article selects the financial data of real estate listed companies from 2016 to 2021,and uses panel regression model and regulatory effect analysis to conduct empirical research from two dimensions: overall impact and heterogeneous impact.In terms of the impact of overall diversification,a nonlinear model is constructed to determine the relationship between diversification and debt default risk,determine the threshold value,and determine the optimal level of diversification;In terms of heterogeneity,regression is conducted through five aspects: business related diversification,business unrelated diversification,cross regional business diversification,enterprise size,and enterprise nature.The statistical results show that: real estate enterprises with a high degree of business related diversification and cross regional operation have a relatively low frequency of bond default events,and private real estate enterprises are the main body of default.The statistical results are consistent with the relevant assumptions of the article.The regression results show that diversification in the overall trend will exacerbate the debt default risk of real estate enterprises,and there is an inverted U-shaped nonlinear impact and threshold;Business related diversification can reduce the debt default risk of real estate enterprises,while there is uncertainty about the impact of business unrelated diversification on debt default risk.Cross regional diversification can reduce the debt default risk of real estate enterprises;Both enterprise size and enterprise nature have regulatory effects.The empirical results are consistent with the article’s assumptions.Finally,based on the results of the article’s analysis,combined with the current market rescue policies for real estate enterprises,suggestions are proposed for enterprise management,such as deepening the main business,increasing the proportion of business related diversification,and appropriate cross regional layout;Propose suggestions for government regulation to promote enterprise specific policies based on city specific policies,and incorporate the diversification and debt risk of real estate enterprises into the identification criteria for high-quality real estate enterprises.With a view to promoting the transformation and development of the real estate market,preventing risks,and better serving the stable macroeconomic market.