Article Type : Research Article
Authors : Ping L, Yong H and Xiuyu D
Keywords : Financial structure; Financing constraint; Total factor productivity; Mesomeric effect model
The total factor productivity is the core issue of industry
in China from “made in China” to “create in China”. This paper aims to study
how China’s financial structure affects the total factor productivity of
Chinese enterprises through the method of financing constraints. The provincial
panel data from 2005 to 2015 are selected through constructing the index of
total factor productivity and financing constraints. The results indicate that
the development of financial market in China’s financial structure can
significantly alleviate the financing constraints faced by enterprises, so as
to promote the improvement of total factor productivity of enterprises.
Since 1998, the annual
growth rate of China’s per capita GDP has been maintained at about 9.3%?and the economy has been in a high-speed
rising trend. However, with the advent of aging population in recent years, the
demographic dividend has gradually disappeared, causing that China is facing
the situation of “middle income trap”, and capital and labor have been unable
to make economic growth efficient. According to the frame of modern economic theory,
total factor productivity is the only way to promote sustained and efficient
economic growth. However, many studies at home and abroad put forward question
on the contribution of total factor productivity to China’s economic growth. In
domestic research, used Malmquist index method to conduct estimation on China’s
total factor productivity, and it was found that China’s total factor
productivity has been decreasing since 1997 [1,2]. The decline of China’s total
factor productivity since 2008 is the reason for the downward trend of real GDP
[3]. At the same time, the total factor productivity gap among different
regions in China is gradually widening, with no convergence effect, leading to
a widening gap in economic growth among the east, the middle and the west [4].
Of course, China’s total factor productivity is at the lowest level compared
with other major countries in the world, so there is still a lot of space to
improve the level of total factor productivity. Therefore, in the context of
the current new normal and supply-side structural reform, how to promote the
improvement of China’s total factor productivity has become an urgent problem.
The three aspects, sufficient R & D investment, human capital investment
and system mechanism matching with technological innovation, are the important
factors affecting the improvement of total factor productivity [5]. However,
from the perspective of financing, the above investment activities will be
subject to financing constraints due to their long cycle and difficult to
observe characteristics [6]. At the same time, China is now characterized by a
dual track financial system, referring that state-owned banks loan funds to
state-owned and large-scale enterprises with artificially low interest rates,
while commercial banks and informal financial institutions loan funds to
private and small-scale enterprises with high interest rates, which makes
China’s private and small-scale enterprises are facing more serious financing
constraints. More than 80% of private enterprises believe that financing
constraint is an important factor to restrain the development of enterprises.
Previous studies have found that financing constraints have a serious
inhibitory effect on the total factor productivity of enterprises. On the one
hand, enterprises with large financing constraints will have a significant
inhibitory effect on fixed assets, R & D and other input production of
enterprises due to the availability of funds, so as to restrain the timely
growth of total factor productivity [7,8]. On the other hand, enterprises with
small financing constraints will have rent-seeking behaviour, and the emphasis
on technological innovation is scattered. At the same time, it is easier to
invest capital in the virtual economy, which generates a lot of material
wealth, rather than in technological innovation, so as to have a negative
effect on its own total factor productivity.
Since Goldsmith put forward the theory of
financial structure in the 1960s, and after it is regarded that the essence of
financial development is the change of financial structure, financial structure
has become an important perspective to study the impact of financing
constraints. The financial structure is based on the ratio of the trading
volume of a country’s stock market to the amount of bank credit. When the ratio
is high, the country is “market-oriented type” and vice versa it is the
“bank-oriented type” [9]. On the one hand, China’s current financial system is
dominated by the banking industry, and state-owned banks play a dominant role.
Loans are dominated by national policies, not out of the principle of profit
maximization [10]. Then, that state-owned banks were interfered by the
government in the credit process. For policy purposes, a large number of funds
are loaned to state-owned enterprises at low interest rates, while private
enterprises and small and medium-sized enterprises are faced with high
financing constraints. On the other hand, China’s stock market is also
characterized by high volatility, high turnover and high speculation, which
makes the resource allocation function of the stock market has not been
effectively played [11,12]. Through the further study, it was found that the
instability of China’s stock market will increase the financing cost of enterprises,
which will cause that the financing constraints faced by enterprises will be
intensified [13]. At the same time, the studies have pointed out that the
development of financial market can reduce the information asymmetry in the
market, so as to reduce the difference of internal and external financing cost
and ease the financing constraints of enterprises. Above all, in the paper, it
holds that the development of China’s financial structure is not reasonable at
this stage, and banks show strong credit discrimination to shut out the
financing of private enterprises and small and medium-sized enterprises. The
financial market shows high instability, which makes the function of pricing
and resource allocation that should have been lost. The financial structure at
this stage may make enterprises suffer from serious financing constraints, so
as to further restrain the promotion of total factor productivity. This paper
attempts to clarify the relationship between the development of financial
structure and the financing constraints of enterprises, and how to affect the
development of China’s total factor productivity level through this
relationship. The rest of this paper is arranged as follows: The second part is
literature review and mechanism analysis; the third part is the model, index
and data description; the fourth part is empirical test and analysis; the fifth
part is the conclusion and suggestion.
The relationship among
financial structure, financing constraints and total factor productivity have
been explored, and existing literature is mainly divided into the following two
aspects: This paper has studied the impact of financial structure on financing
constraints and the impact of financing constraints on total factor
productivity of enterprises. The following is a review of the relevant
literature. The impact of financial structure on financing constraints can be
roughly divided into two categories: On one hand, it is considered that the
irrational structure of China’s banking industry leads to serious financing
constraints for Chinese enterprises. The study pointed out that China’s economy
is in a form of “financial repression”, which not only shows that the official
interest rate is lower than the market interest rate, but also shows that
state-owned banks are in a monopoly position. This will make it impossible for
China’s banking industry to form an effective competition mechanism, which will
increase bank loans and reduce enterprise financing costs, so as to relief
financing constraints [14,15]. At the same time, the Bank of China shows strong
“ownership discrimination” and “scale discrimination” in the credit process,
and private enterprises are facing more serious financing constraints compared
with state-owned enterprises [16]. On the other hand, previous studies have
shown that the development of financial market in financial structure can
significantly alleviate the financing constraints faced by enterprises [17].
The development of a country’s stock market is positively correlated with the
external financing channels of small and medium sized enterprises in the test
of transnational data; Further domestic research has shown that the development
of China’s regional financial market can improve China’s financial system, so
as to relieve the financing constraints faced by enterprises [18,19]. By
straightening out, this paper finds that both aspects of financial structure
have an impact on China’s financing constraints. However, one thing that cannot
be ignored is that the banks, especially the state-owned banks, play the role
of government financial function in the society under China‘s special national
conditions. The existence of this function makes the state-owned banks
inevitably incline more financial resources to the state-owned enterprises, and
it cannot completely change the status quo of the banking industry through the
implementation of policies or other ways. Thirdly, in recent years, small and
medium-sized board and growth enterprise market have opened one after another
in the financial market, which provides more diversified financing paths for
China’s small and medium-sized enterprises. At the same time, China has been
implementing a relatively loose monetary policy in recent years, and the
development of financial market plays an “intermediary” role, which is
conductive to strengthening the transmission and implementation of monetary
policy [19]. When China’s loose monetary policy is effectively implemented, it
will lower the interest rate, which can help enterprises to reduce financing
costs and ease the degree of financing constraints.
Hypothesis 1: China’s financial structure is one of the important
factors that cause enterprises to face financing constraints. Compared with the
structure of banking industry, the development of financial market can
significantly relieve the financing constraints faced by Chinese enterprises.
As a measure of technological progress, total factor productivity has been in
stagnant state in China’s development as the world’s second largest economy,
which has aroused extensive attention of scholars at home and abroad, where
China’s severe financing constraints have become a key aspect to explain the
lagging development of total factor productivity. As mentioned above, the
financing constraints faced by enterprises are caused by the two aspects of
information asymmetry and financing discrimination in China [20]. On one hand,
owing to information asymmetry, banks require a lot of collateral in the
process of lending, and innovation investment is often intangible assets, which
cannot be taken as the collateral to get a loan from the bank, so as to make
enterprises have to give up favorable investment opportunities, and restrain
the growth of total factor productivity of enterprises. On the other hand,
affected by financing discrimination, non-state-owned enterprises cannot obtain
too much external financing. In order to ensure the sustainability of the
capital chain, a large number of internal funds will be used to maintain the
production and operation of the enterprise, which has a significant inhibitory
effect on R & D investment and human capital accumulation, so as to hinder
the development of total factor productivity. At the same time, the existing
studies have confirmed that a large number of credit funds flow into
inefficient state-owned enterprises, and banking credit activities do not
significantly promote total factor productivity [21,22]. On the contrary, when
the financing constraints of non-state-owned enterprises are relieved and
financing channels are increased, the total factor productivity will be
significantly increased [23,24]. Furthermore, some scholars have measured how
much loss China’s financing constraints will have on total factor productivity,
and have studied the loss of output efficiency in China compared with America,
finding that the total factor productivity loss of Chinese industrial
enterprises reached 50% in 1998-2005. Subsequently, has calculated the loss
range of total factor productivity of various industries due to financing
constraints as high as 20% - 70% on the basis of H-K model [25]. Above all, we
find that financing constraints inhibit the development of total factor productivity
of enterprises from investment intention, R & D investment, human capital
and other aspects. Meanwhile, the price of capital factor is distorted under
China’s current situation, which makes capital flow into state-owned
enterprises at a lower cost, which has crowding-out effect on non-state-owned
enterprises, making the faced degree of financing constraints higher, and
dragging down the development of its total factor productivity level.
Hypothesis 2: Financing constraints are one of the important ways
to restrain the growth of China’s total factor productivity of enterprises.
Compared with state-owned enterprises, the non-state-owned enterprises are more
seriously affected by the reduction of total factor productivity due to the
constraints of financing.
Hypothesis 3: The development of China’s financial market can
improve the level of total factor productivity.
The possible
contributions of this paper are divided into the following two parts:
Throughout the existing literature, some scholars explore the impact of
financial structure on financing constraints and the impact of financing
constraints on total factor productivity. Firstly, in this paper, the three
parts are linked to take financing constraints as an intermediate channel to
explore the impact of financial structure on total factor productivity.
Secondly, the existing literature tends to pay attention to the impact of
financial development on financing constraints, ignoring the development of
China’s financial structure, and a large number of scholars only tested how the
financial development level affects the financing constraints in the process of
empirical study. Only a few scholars have constructed financial structure
indexes, and tested the impact of China’s financial structure on financing
constraints. The micro data of listed companies are adopted in this paper to
make an empirical study on how China’s financial structure affects total factor
productivity through financing constraints.
Econometric
model
This paper aims to analyse that the unreasonable development of China’s financial structure makes Chinese enterprises face serious financing constraints, so as to influence the promotion of total factor productivity of enterprises. In order to analyse and understand the relationship of the three more intuitively, this paper takes financing constraints as intermediary variables, financial structures as explanatory variables, and total factor productivity of enterprises as the explained variables. Based on the method of, this paper establishes the following mediating effect model.
Above all, I, t
represents the individual and year of the enterprise respectively, lnTFP LP
represents the total factor productivity of enterprises, FS represents the
current financial structure of China, SA represents the SA index, aiming the
degree of financing constraints on enterprises, and SA index represents
negative value. So the greater its absolute value, the greater the degree of
financing constraints faced by enterprises. Control is the control variable,
and zzl is the growth rate of main business, which approximately substitute for
the growth of enterprises. The enterprises with better growth are less
constrained by financing, and their total factor productivity level increases
faster. Lnage represents the enterprise age, and about the age of enterprises,
most scholars think that the old enterprises have more advantages in the
financing process, and at the same time, whether new enterprises or old
enterprises focus on innovation and technology investment is also one of the
focuses of enterprise innovation theory. The hhi represents market competition,
and the market share is used as an approximate substitute in this paper,
referring to the current year’s main business income of listed companies /
current year’s main business income of all listed companies. When the
competitiveness of enterprises is strong, the degree of financing constraints
is relatively small. The roe represents return on net assets, which is used to
measure the efficiency of enterprises using their own capital. When the index
value is higher, explaining that the level of return from investment will be
higher. The capital represents the capital intensity with the usage of fixed
assets / number of employees. Compared with labour-intensive enterprises, capital
intensive enterprises tend to choose technology investment and innovation.
Index
description
On the measurement of financing constraints, the mainstream methods are mainly divided into three categories: KZ index, WW index, SA index. When selecting indicators, KZ index and WW index all adopt endogenous financial variables related to financing constraints, such as cash flow. To prevent endogeneity, used the KZ index to divide the degree of financing constraints by financial statements, and at the same time, the SA index is constructed by using only two variables of enterprise size and enterprise age: -0.737 * Size + 0.043 * Size2 - 0.04 * Age. Therefore, after this paper selects SA index and takes its absolute value, SA is an index to measure the degree of financing constraints of enterprise. On the measurement of total factor productivity, the existing literature mainly uses OP and LP methods. Semi parametric regression model to establish continuous production mode parameters to take the investment amount as the proxy variable of productivity, and the robust productivity can be obtained by controlling the deviation. The intermediate inputs of enterprises as proxy variables based on OP method, to avoid the problem of data truncation, which can more accurately reflect the changes of total factor productivity of enterprises. This paper chooses the LP method to measure the total factor productivity of enterprises. The indexes needed for LP method mainly include Yit, Kit, Lit and Mit. The Yit represents income, which is represented by the main business income of the enterprise in this paper; The Kit represents capital investment, and the average original value of fixed assets is used to measure in this paper; The Lit represents labor input, and this paper uses the number of employees to measure; The Mit represents the investment in intermediate products of enterprises, and this paper uses the method of for reference, and measures it by the cash outflow of purchasing products and services; the Iit represents investment amount, and this paper uses for the definition of capital, and uses the construction of fixed assets and other cash payments to measure. Among them, Yit can be obtained after the consumer price index deflated, Kit can be obtained the fixed asset investment price index deflated, and Mit and Iit can be obtained by the regional GDP index deflated. About the financial structure, the relative composition of financial market and bank is used to express in the paper. On the definition of financial market, some scholars point out that it mainly refers to the stock market (Allen and Gale, 2000; Levine, 2005). Therefore, the total market value of the stock market is approximately substituted for the financial market, and the total amount of bank credit is substituted for the bank.
Data
sources
This paper uses the panel data of 30 regions in Chinese mainland for 2005-2015 years to conduct an empirical analysis. Among them, the total regional production index, consumer price index and fixed asset investment price index are all derived from the annual data of provinces of the National Bureau of Statistics of China. The total assets of the bank come from the “Financial Operation Report” of all provinces in China. The total market value of stock market, main business income of listed enterprises, original value of fixed assets, total assets and other micro data of enterprises in each province are all from Wind database. Meanwhile, the financial enterprises, ST and *ST enterprises, and roe and growth rate abnormal enterprises are eliminated (Table 1,2).
Table 1: Statistical description of related variables.
Variable |
Number of samples |
Mean |
Standard deviation |
Minimum |
Max |
LnTFP_LP |
19257 |
7.745 |
1.045 |
1.898 |
12.469 |
FS |
19275 |
3.488 |
2.529 |
0.090 |
16.821 |
SA |
19257 |
2.979 |
0.518 |
0.0005 |
5.047 |
L1 |
19257 |
7.559 |
1.312 |
1.946 |
13.223 |
zzl |
19257 |
13.167 |
24.261 |
-49.917 |
100 |
lnage |
19257 |
2.610 |
0.386 |
0 |
4.174 |
hhi |
19257 |
0.0008 |
0.016 |
0 |
2.077 |
roe |
19257 |
8.029 |
10.226 |
-49.967 |
49.978 |
capital |
19257 |
77.559 |
564.138 |
0 |
33810.97 |
|
LnTFP_LP |
FS |
SA |
L1 |
zzl |
lnage |
hhi |
roe |
capital |
LnTFP_LP |
1.0000 |
|
|
|
|
|
|
|
|
FS |
-0.1073 |
1.0000 |
|
|
|
|
|
|
|
SA |
-0.6871 |
0.0580 |
1.0000 |
|
|
|
|
|
|
L1 |
0.5318 |
-0.0088 |
-0.6293 |
1.0000 |
|
|
|
|
|
zzl |
0.1209 |
-0.0163 |
-0.0572 |
0.0146 |
1.0000 |
|
|
|
|
lnage |
0.0583 |
-0.1556 |
0.2999 |
-0.0035 |
-0.1484 |
1.0000 |
|
|
|
hhi |
0.1091 |
0.0101 |
-0.1282 |
0.1009 |
0.0144 |
-0.0547 |
1.0000 |
|
|
capital |
0.0472 |
-0.0329 |
-0.0850 |
-0.1352 |
-0.0138 |
0.0064 |
0.0040 |
1.0000 |
|
roe |
0.2508 |
-0.0959 |
-0.1408 |
0.0909 |
0.3120 |
-0.0526 |
0.0173 |
-0.0005 |
1.0000 |
This part is based on
the mesmeric effect model to conduct empirical test on the influence of
financial structure for total factor productivity of enterprises. In this
paper, OLS and GMM regression method were used to regress the model, and the
regression results are shown in Table 3. Meanwhile, according to the procedure
of, the detection has been conducted in the paper, finding that coefficient ? 1
is significant at 1% level and explaining that it is reasonable to use
financing constraints as intermediary variables [26]. This paper uses the panel
data of 30 regions from 2005 to 2015, and uses OLS and GMM methods to test the
mesomeric effect of model (1), model (2) and model (3), whose results show that
the effect of FS on lnTFP_LP in model (1), and the coefficients of FS to SA in
model (2) are significant at 1%, indicating that the mesomeric variable
selected in this paper is reasonable and the mesomeric effect is significant.
In model (3), FS to lnTFP_LP coefficient still passing the 1% significance test,
explaining that this paper is partial mesomeric effect. Financial structure not
only affects the total factor productivity of enterprises through financing
constraints, and unreasonable financial structure will also reduce the
attraction of China’s foreign direct investment, so as to restrain the
improvement of total factor productivity of Chinese enterprises (Table 3).
Note: ***, * *and *
represent that it is significant at the level of 1%, 5%, and 10% respectively,
and t value is in brackets.
According to the mesomeric effect model, model (1), model (2) and model (3) are sorted out:
Finally, it can be
obtained by calculation that the results of OLS and GMM by the influence of FS
on lnTFP_LP through financing constraints are -0.029 and -0.251, respectively.
In the following, we will systematically analyze the regression results of GMM.
The
influence of financial structure on total factor productivity of enterprise
Table 3: Estimation results of the model of mesomeric effect.
Variable |
OLS |
OLS |
OLS |
GMM |
GMM |
GMM |
lnTFP_LP ?1? |
SA ?2? |
lnTFP_LP ?3? |
lnTFP_LP ?1? |
SA ?2? |
lnTFP_LP ?3? |
|
FS |
-0.0294*** ?-11.46? |
0.0100*** ?9.33? |
-0.0151*** ?-7.26? |
-0.0432*** ?-10.26? |
0.0160*** ?8.79? |
-0.2301*** ?-6.80? |
SA |
|
|
-1.3986*** ?-99.76? |
|
|
-1.3293*** ?-70.57? |
L1 |
0.4240*** ?94.17? |
-0.2494*** ?-132.98? |
0.0744*** ?14.74? |
0.4187*** ?48.16? |
-0.2654*** ?-73.61? |
0.0744*** ?9.66? |
zzl |
0.0032*** ?14.09? |
-0.0001 ?-1.41? |
0.0031*** ?16.74? |
0.0032*** ?10.72? |
-0.0001*** ?-1.51? |
0.0030*** ?12.30? |
lnage |
0.0322*** ?2.07? |
0.5316*** ?81.79? |
0.7788*** ?53.22? |
0.0816*** ?3.95? |
0.6000*** ?57.78? |
0.8683*** ?42.76? |
hhi |
1.5263*** ?4.34? |
-0.9267*** ?-6.41? |
0.2155 ?0.76? |
55.7109*** ?3.96? |
-17.6403*** ?-5.72? |
11.0494*** ?3.77? |
capital |
0.0002*** ?23.43? |
-0.0001*** ?-32.49? |
0.00004*** ?6.07? |
0.0002*** ?4.80? |
-0.0001*** ?-5.32? |
0.0001** ?2.94? |
roe |
0.0183*** ?33.53? |
-0.0027*** ?-12.26? |
0.0144*** ?32.39? |
0.0188*** ?24.50? |
-0.0032*** ?-11.17? |
0.0147*** ?22.54? |
soe4 |
0.2383*** ?15.29? |
-0.0912*** ?-14.07? |
0.1144*** ?9.03? |
0.1864*** ?10.55? |
-0.0649*** ?-7.87? |
0.1071*** ?7.77? |
yeadum |
yes |
yes |
yes |
yes |
yes |
yes |
indum |
yes |
yes |
yes |
yes |
yes |
yes |
Hansen test?p? |
|
|
|
0.84 |
0.16 |
0.50 |
There are two main
reasons for the above results: First, the financial services provided by banks
and financial markets are not the same. The comparative advantage of banks is
that they can effectively reduce financial frictions and transaction costs when
dealing with a series of “standardized” financing with short-term, low-risk and
large amount of collateral; Financial markets are more effective in designing
new, long-term and high-risk projects (Allen and Gale, 1999). The general characteristics
of projects at the forefront of technology are huge investment (mostly invested
in intangible assets, such as patented technology and human capital), long
recovery cycle and high risk, so the development of the banking industry cannot
provide good financial services for such projects, and the financial market can
meet the needs of such projects. Secondly, banks and financial markets pay
interest in different ways. If financing is through banks, the principal and
interest must be paid on time. Once the project has problems, such as the
broken asset chain, it will be difficult for the enterprise to repay the
principal and interest, which will make enterprises enter into great crisis of
liquidation and bankruptcy [27]. On the contrary, if the enterprise is
financing through the financial market, and when the project encounters
problems, it may be reflected in the decrease of stock price or dividend in the
short-term, which will not lead enterprises facing the crisis of liquidation
and bankruptcy directly, and make enterprises have enough time to adjust.
Therefore, the financing mode of regular repayment of principal and interest by
banks will inhibit the enthusiasm of enterprises to invest in technology
research and development, and the financial market has a certain role in
promoting the enthusiasm of technology R & D investment.
The
influence of financial structure on financial constraints
The coefficient of FS
to SA is 0.0160 and passes the 1% significance level test, indicating that
China’s financial structure has a positive effect on SA index at present. While
the larger the SA index, the greater the degree of financing constraints faced
by enterprises, indicating that China’s current financial structure is one of
the important factors for Chinese enterprises to face financial constraints.
When the financial structure increases by one unit, the financing constraint
index increases by about 1.6%. At the same time, at this stage, the development
of banking industry will make the financing constraints faced by enterprises
more serious, and the development of financial market can effectively alleviate
the financing constraints faced by enterprises. This result confirms the
hypothesis 1. The reasons for the above are as follows. On the one hand, since
1978, the allocation of China’s financial resources has changed from financial
allocation to bank loans, and the state and state-owned commercial banks have
completed this measure by signing financial contracts. In this particular
historical context, China’s state-owned banks show a unique “paternalism” to
lend a lot of money to state-owned enterprises, and these lending decisions are
often made for political purposes, which is not determined by the principle of
efficiency maximization, leading to the uneven distribution of financial
resources in China, so as to cause the occurrence of financing constraints of
other non-state-owned enterprises. Other commercial banks show the tendency of
“mortgage guarantee first”, and most of the acceptable collateral are fixed
assets such as houses and land. For small and medium-sized enterprises, the
amount of fixed assets that can be mortgaged is small, and there are almost no
assets that meet the requirements of banks and can be used for loan mortgage,
so it is difficult to finance from banks through formal channels [28]. On the
other hand, the financial market has the characteristics of direct financing
and diversified ways, which can overcome the barriers of natural entry and
institutional entry in asset transfer, and ensure the liquidity of assets in
the process of transfer. Meanwhile, the stock price conveys the information
about the enterprise value in the financial market, and the lender will decide
the amount and period of funds granted to the enterprise according to the stock
price. There is no need to issue loans to enterprises through hard indexes such
as collateral.
The
impact of financial structure on total factor productivity through financing
constraints
Finally, we calculate
FS to lnTFP_LP by means of the mesomeric effect model, and the mesomeric effect
coefficient of is -0.251, and the results show that China’s irrational
financial structure has seriously inhibited the development of total factor
productivity of enterprises through financing constraints at this stage. The
influence of development of banking and financial market on total factor
productivity is the same as the above paper without too much detail. The
reasons for the above results is that on one hand, China is in the period of
transition economy, and there is a serious financial repression in the
financial departments, referring to the serious control of interest rate and
exchange rate. In the case of small interest rate change, banks will be
responsible for high-risk loans to high-tech industries, without achieving the
corresponding risk premium subsidy, which will make banks lose the enthusiasm
for its loans, and incline to lend funds to labour or capital intensive
enterprises with low risk. On the other hand, enterprises’ investment in high-tech
means great uncertainty, high proportion of specific equipment, intangible
assets and high sunk cost. It is difficult for banks to evaluate the value of
such projects and supervise enterprises accordingly. Therefore, the financing
constraints of banks for innovative technology projects are more serious than
other projects. When the enterprises cannot borrow enough funds from the bank
to invest, they have to give up the development of technological innovation
projects, so as to influence the promotion of total factor productivity of
enterprises. On the contrary, on one hand, the function of financial market is
not only financing, but also pricing. When the technological innovation project
of an enterprise is successful, the market share and operating revenue of the
enterprise will rise correspondingly, which can be reflected in the rise of the
stock price, referring that borrowers can get the risk premium of high-risk
projects through the financial market. Therefore, the financial market can
increase the enthusiasm of borrowers for such projects. On the other hand, when
the enterprises directly conduct financing in the financial market, the
necessary condition is that enterprises must disclose information regularly.
Such initiatives enable investors to monitor the current projects of the
enterprise. When investors have good expectations for the project, it will lend
money to enterprises. Meanwhile, the risk sharing mechanism of the financial
market makes the financial market and the borrowers share the risk. Even if the
enterprise’s profitability declines in the short term and causes the stock
price fluctuation, the borrowers will not rush to liquidate the enterprise.
Therefore, when enterprises invest in high and new technology, they cannot only
obtain sustainable sources of funds, but also will not fall into financial
crisis due to the rupture of capital chain. In conclusion, the development of
China’s financial market can significantly alleviate the financing problems
faced by enterprises in the development of high-tech, which can improve the
enterprises’ enthusiasm for technology investment and innovation, and promote
the improvement of the total factor productivity of Chinese enterprises at the
same time.
Result
analysis on regression analysis of other variables
As can be seen from columns 6 and 7 of Tab. 3, the coefficient of enterprise size to financing constraint index and total factor productivity is -0.2654 and 0.0744 respectively, which all pass the 1% significance test, which are consistent with the results of most scholars, showing that when the scale of enterprises increases, the financing constraints will decrease, and total factor productivity level increases. The coefficient of enterprise age to total factor productivity is 0.8683, and passes the 1% significance test, showing that the longer the enterprise lasts, the lower the degree of financing constraints, and the total factor productivity rises accordingly. Market competition, growth rate of business income and roe are negatively correlated with financing constraint index, and the total factor productivity level is positively correlated, passing the 1% significance test, and proving that the improvement of enterprise performance can significantly alleviate the financing constraints faced by enterprises, which is also in line with the common sense of enterprises in the financial market financing or bank financing. Meanwhile, when the market competitiveness of enterprises is strong, the income is rising and the profitability is increasing, enterprises can first rely on internal financing to solve the capital problem, so as to improve the total factor productivity level of enterprises. The soe4 is represented as state-owned enterprise in dummy variable, whose coefficient of financing constraints is negative, and the coefficient of total factor productivity is positive, passing the 1% significance test, showing that China’s state-owned enterprises have increased, while financing constraints have declined, and reflecting that the degree of financial constraints of Chinese state-owned enterprises is less than that of non-state-owned enterprises, so as to prove the hypothesis 2. The possible reasons are as follows: The increase of state-owned enterprises can significantly improve China’s total factor productivity. A large amount of capital flows to state-owned enterprises at a lower cost, making them far superior to non-state-owned enterprises in terms of human capital accumulation and investment in fixed assets. Although the efficiency of technological innovation is lower than that of non-state-owned enterprises, it has an absolute advantage in technological progress [30]. Although the capital intensity of enterprises has passed the 1% significance test on financing constraint index and total factor productivity, its influence value is almost 0. The possible reason is that the development of total factor productivity depends on a large number of intangible assets, and intangible assets are difficult to measure, and cannot use fixed assets / number of employees to fully explain that the total factor productivity of enterprises with more capital must be higher than that of labor-intensive industries [31,32].
No matter from the
distribution of industry or the development of financial market, there are
significant differences among the eastern, central and western regions of
China. In order to analyze whether the impact of financial structure on total
factor productivity of enterprises through financing constraints varies with
different regions, this paper further tests the heterogeneity of samples, and
uses GMM to test the mesomeric effect of model (1), model (2) and model (3), so
as to further conduct robustness check on it through 2SLS regression test.
First, we can see the influence of FS1, FS2, FS3 in column 1 of Tab. 4 on of
lnTFP_ LP were -0.0140, -0.0624 and -0.0662 respectively, all passing the 1%
significance test1, referring that the financial structure in eastern China has
the least inhibition on total factor productivity of enterprises, the central
region takes the second place, and the western region has the highest degree of
inhibition on the level of total factor productivity. This result is also in
line with the current situation in China, and the development degree of capital
market and the rationalization degree of financial structure in the eastern
region are better than those in the central and western regions. The influence
of FS1, fs2 and FS3 in the second column on SA index were 0.0110, 0.0263 and
0.0179 respectively, all passing the 1% significance test, referring that the
influence of financial structure on financing constraints in eastern China is
less than that in central and western China, which is reasonable. Compared with
the western region, the impact of unreasonable financial structure on the
financing constraints of enterprises in the central region is more serious, and
the possible reason lies in China’s western development plan. The state intends
to support enterprises in the western region, with different degrees of
preference in terms of subsidies and fiscal policies. Under the influence of
such policies, enterprises in the western region are less constrained by
financing, which affects the empirical results. The influence of FS1, FS2, FS3
and SA in the third column on lnTFP_LP were -0.0013, - 0.0300, - 0.0426, -
1.3164, respectively. Except for FS1, the other variables have passed the 1%
significance test. However, FS1 fails to pass the significance test, which
indicates that the impact of financial structure on total factor productivity
of enterprises in eastern China through financing constraints is a complete
mesomeric effect, referring that the eastern region only restrains the
improvement of total factor productivity through financing constraints. The
possible reason is that most of the overseas direct investment in eastern China
is in the developed areas of eastern China, and this channel will improve the
level of total factor productivity in eastern China (Table 4).
Finally, we bring the data of columns 1, 2 and 3 into the model (6) for calculation to achieve that the results show that the financial structure of the eastern, central and western regions of China has an impact on total factor productivity of -0.015, - 0.0646, - 0.0661 respectively through financing constraints. The final result shows that the financing channel in eastern China has the least inhibition on total factor productivity of enterprises, the central region takes the second place, and the western region is the most serious. For other variables, the results are roughly consistent with the above analysis, which will not be repeated here.
Table 4: Heterogeneity test of financial structure’s impact on total factor productivity of enterprises through financing constraints.
Variable |
GMM |
GMM |
GMM |
2SLS |
2SLS |
2SLS |
lnTFP_LP ?1? |
SA ?2? |
lnTFP_LP ?3? |
lnTFP_LP ?1? |
SA ?2? |
lnTFP_LP ?3? |
|
FS1 |
-0.0140** ?-2.87? |
0.0110*** ?5.31? |
-0.0013 ?-0.34? |
-0.0141** ?-2.94? |
0.0110*** ?5.23? |
-0.0014 ?-0.37? |
FS2 |
-0.0624*** ?-11.23? |
0.0263*** ?10.95? |
-0.0300*** ?-6.66? |
-0.0626*** ?-11.35? |
0.0262*** ?10.77? |
-0.0302*** ?-6.71? |
FS3 |
-0.0662*** ?-14.33? |
0.0179*** ?8.90? |
-0.0426*** ?-11.38? |
-0.06663*** ?-14.43? |
0.0178*** ?8.75? |
-0.0427*** ?-11.38? |
SA |
|
|
-1.3164*** ?-69.76? |
|
|
-1.3163*** ?-81.05? |
L1 |
0.4211*** ?48.61? |
-0.2664*** ?-73.89? |
0.0789*** ?10.24? |
0.4214*** ?76.55? |
-0.2665*** ?-110.91? |
0.0791*** ?12.85? |
zzl |
0.0033*** ?10.99? |
-0.0002 ?-1.66? |
0.0030*** ?12.56? |
0.0033*** ?11.95? |
-0.0001 ?-1.64? |
0.0031*** ?13.80? |
lnage |
0.0841*** ?4.09? |
0.6012*** ?58.13? |
0.8641*** ?42.60? |
0.0831*** ?4.09? |
0.6009*** ?66.93? |
0.8633*** ?45.08? |
hhi |
57.0552*** ?3.95? |
-17.4120*** ?-5.68? |
11.0278*** ?3.80? |
54.8348*** ?17.21? |
-17.3734*** ?-16.88? |
11.0180*** ?4.16? |
capital |
0.0002*** ?4.84? |
-0.0001*** ?-5.35? |
0.00005*** ?3.02?
|
0.0002*** ?21.05? |
-0.0001*** ?-30.48? |
0.00005*** ?5.20? |
roe |
0.0184*** ?23.96? |
-0.0031*** ?-10.80? |
0.0144*** ?22.20? |
0.0184*** ?28.87? |
-0.0031*** ?-11.23? |
0.0144*** ?27.66? |
soe4 |
0.2137*** ?12.03? |
-0.0699*** ?-8.43? |
0.1277*** ?9.41? |
0.2134*** ?12.33? |
-0.0694*** ?-9.10? |
0.1277*** ?9.05? |
yeadum |
yes |
yes |
yes |
yes |
yes |
yes |
indum |
yes |
yes |
yes |
yes |
yes |
yes |
Hansen test?p? |
0.11 |
0.12 |
0.37 |
|
|
|
Sargan ?P? |
|
|
|
0.12 |
0.13 |
0.39 |
From the perspective of financing constraints,
this paper analyses the impact of China’s financial structure on the
development of total factor productivity under the mesomeric effect model. Then
the panel data of 30 provinces in China from 2005 to 2015 are selected to use
the fixed effect method to empirically test the influence of financial
structure on the level of total factor productivity. The empirical results
prove the hypothesis of this paper, indicating that China’s financial structure
needs to be optimized, and the good development of financial market can slow
down the financing constraints faced by Chinese enterprises, especially
non-state-owned enterprises, so as to ease the constraints on China’s total
factor productivity due to financing constraints. Although China is still a
bank-oriented financial system, this paper holds that the financial market
plays an indispensable role in the industrial upgrading and economic
transformation of Chinese enterprises. At present, China’s GDP growth is slowing
down, and simple rough machining and imitating the technology of developed
countries can no longer meet the conditions for China’s sustained and rapid
economic growth, so Chinese enterprises will inevitably change from “rough
processing” and “technology imitation” to “technological innovation”.
Therefore, China should speed up the development and reform of the financial
market, establish a diversified financial market, and support the development
of financing platforms such as gem and small and medium-sized board to provide
corresponding financial services for high-quality high-tech industries, and
ease the financing difficulties of enterprises, which will lead the total
factor productivity level in a state of slow development. Of course, China’s
relevant departments should also strengthen supervision over the financial
market, introduce corresponding laws, maintain a good order and environment for
the operation of the financial market, and reduce the occurrence of
speculation. Of course, when we construct the financial structure, only the
stock market is taken as a financial market to test the empirical analysis, and
there is no relevant test and analysis on the bond market, which is also the
deficiency of this paper and the important direction of future research.