Effect of Commercial Paper Market Development on Real Economy
As a crucial monetary submarket connecting the real economy and financial markets,the commercial paper market not only provides convenient,cost-effective financing for enterprises but also serves as a vital platform for monetary policy implementation.As a crucial component of China's financial supply-side structural reform,the development of a unified national commercial paper market has emerged as a significant measure to empower the high-quality development of the real economy.In particular,compared with other financial markets,the commercial paper market has lagged significantly behind in infrastructure development,severely undermining its effectiveness in serving the real economy.In response,China strives to strengthen the supporting role of the commercial paper market by establishing a nationwide,highly centralized,and unified commercial paper market.The establishment of Shanghai Commercial Paper Exchange Corporation Ltd(SHCPE)in 2016,which marks the largest and most significant institutional innovation in China's commercial paper market,has shifted the commercial paper market from a fragmented,opaque,paper-based,and offline over-the-counter trading model to a unified,secure,efficient,and electronic on-exchange trading model nationwide.Before the SHCPE,corporate bills receivable were difficult to transfer or discount promptly,which exacerbated liquidity constraints,increased debt financing costs,and ultimately adversely affected corporate real investment.With the SHCPE,enterprises holding bills receivable can conveniently transfer or discount their bills receivable,thus mitigating liquidity constraints and reducing the high debt financing costs arising from financing frictions.This not only directly provides adequate funding support for enterprises to increase their investments but also indirectly enhances the return on their investments.Using the SHCPE launch in 2016 as a quasi-natural experiment,this paper employs a difference-in-differences strategy with a sample of non-financial listed companies in the Chinese mainland from 2012 to 2021 to examine the effect of a national commercial paper exchange on corporate investment.The results show that firms with a higher level of receivables significantly increased their investments following the establishment of the SHCPE.This effect is more pronounced for firms with fewer bank branches around them,greater financial constraints,and executives lacking financial expertise,operating in more competitive industries and regions with a poorer business environment.The SHCPE affected corporate investment via two channels:alleviating liquidity constraints and lowering debt financing costs.Additionally,the study finds that the SHCPE reduced firms'underinvestment and improved their operating performance.Based on these findings,this paper proposes that well-developed infrastructure in the commercial paper market can fully stimulate its vitality.Therefore,we should further advance the infrastructure construction of the commercial paper market and enhance the commercial paper circulation and management systems.This includes leveraging big data,cloud computing,and other technologies amid rapid scientific and technological advancements to further strengthen the commercial paper circulation system across regions and sectors.Additionally,the effects of a nationwide unified commercial paper market on the real economy vary significantly across different types of enterprises,industries,and regions.Hence,we should comprehensively consider the characteristics of enterprises,industries,and regions,tailor the pace and focus of infrastructure construction to them,and advance it in a targeted manner.Furthermore,we should encourage financial institutions to collaborate with the SHCPE to launch customized commercial paper financing products and establish risk-sharing mechanisms.Overall,this paper introduces micro-level empirical evidence on the effects of the national commercial paper market,contributing to a better understanding of financial infrastructure in the Chinese market.This study provides insights into strengthening the role of the commercial paper market in supporting China's high-quality economic development.
Commercial Paper MarketEffect on the Real EconomyShanghai Commercial Paper Exchange Corporation Ltd
NETL
NSTL
万方数据
