The Study on Deleveraging of State-Owned Enterprises

Based on the Perspective of Regional Financial Risk

DOI

10.2991/aebmr.k.201111.001How to use a DOI?

Keywords

state-owned enterprise, leverage, pressure of debt financing, regional financial risk

Abstract

The rise of China’s macro leverage has become one of the main factors inducing financial risks. How to reduce the leverage level of the soft budget constraint sector, especially the leverage level of the state-owned enterprise (SOE) sector, is the key link to prevent systemic risks. Based on the panel data of 30 provinces and cities from 2007 to 2015, this paper studies the impact of de-leverage of SOEs on regional financial risks under the impact of debt financing pressure, and the important role of debt financing demand elasticity in the deleveraging process. The research results show that the pressure of debt financing makes the leverage of SOEs have the effects of “active” and “passive”. SOEs with higher debt financing demand elasticity will “actively” reduce the proportion of debt financing and reduce the level of leverage. SOEs with weaker debt financing demand elasticity will “passively” sell assets to meet their rigid financing needs, which will lead to asset price declines and push up leverage. Therefore, the government should exert a reasonable impact on the regional SOEs with better debt financing demand elasticity, guide the sectors to “actively” reduce leverage and ease the local financial risks. The government should also avoid direct impact on regional SOEs with weaker debt financing needs, prevent the sector’s deleveraging process from being dominated by “passive” effects, and avoid the expansion and spread of regional financial risks.

Copyright

© 2020, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Xi Chang
AU  - Yiteng Hu
PY  - 2020
DA  - 2020/11/13
TI  - The Study on Deleveraging of State-Owned Enterprises
BT  - Proceedings of the 2020 International Conference on Management, Economy and Law (ICMEL 2020)
PB  - Atlantis Press
SP  - 1
EP  - 7
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.201111.001
DO  - 10.2991/aebmr.k.201111.001
ID  - Chang2020
ER  -