How Does Financial Rule of Law Construction Support the Real Economy:From the Perspective of Long-Term Debt Financing
Debt plays a crucial role in the development of the real economy,while long-term debt is directly linked to long-term capital formation and is the driver for capital accumulation and economic growth.However,compared with firms in major economies around the world,the long-term debt ratio of Chinese firms is significantly lower,which leads to the problem of short-term debt for long-term use that constrains Chinese firms'development.In this context,it is important to understand the causes of Chinese firms'low long-term debt ratio,and optimize the institutional design to adjust the debt maturity structure of Chinese firms,which is crucial for China's high-quality economic development.The lack of long-term debt of Chinese firms is a long-lasting phenomenon.Compared to short-term policies,institutional reason is more accountable for its formation.Therefore,the more essential solution to improve the long-term debt financing of firms is the institutional reform in China's financial system,such as the improvement of the financial rule of law system.However,existing literature has not fully assessed how the financial rule of law construction affects firms'debt maturity structure.Whether,to what extent,and through which channel the financial rule of law construction will affect firms'long-term debt financing?This question remains to be examined.To answer this question,this paper uses the data of A-share listed companies from 2007 to 2022 and empirically explores the relationship between financial rule of law construction and corporate debt financing by taking the establishment of financial tribunals in China's local courts as a natural experiment.This paper finds that the establishment of financial tribunals can significantly increase the long-term debt ratio of firms.Improving the efficiency of judicial trial and enforcement of financial cases and reducing the information asymmetry between enterprises and creditors are important mechanisms.Meanwhile,the above effect is mainly driven by the increase in firms'long-term loan ratio and is more significant in regions with stronger bank competition.A comparison of different reform types reveals that the effect of financial tribunals is significantly stronger than that of financial collegial bench.In addition,the financial tribunals mainly affect firms'debt maturity structure and have no significant effect on the volume and cost of firms'debt financing.Further analysis shows that the establishment of financial tribunals significantly reduces firms'short-term debt for long-term use,and increases firms'long-term investment.The contributions of this paper are as follows.Firstly,this paper expandsthe boundaries of existing law and finance literature.Based on China's unique institutional background,this paper explores the impact of financial tribunals on the real economy for the first time.Secondly,this paper enriches research on the maturity structure of corporate debt and the factors affecting firms'short-term debt for long-term use.This paper provides new explanations for the causes of firms'low long-term debt ratio from the institutional perspective.Thirdly,the findings of this paper provide policy insights for the improvement of China's financial rule of law system and how to make finance serve the real economy better in the future.
financial rule of lawfinancial tribunallong-term debt financingreal economy
NETL
NSTL
万方数据
