Reform of Decentralization,Government Intervention and Debt Financing of State-Owned Enterprises

Abstract

Debt financing is an important aspect of capital structure.The paper studies how China's reform of decentralization and government intervention affect the debt financing of state-owned enterprises through the method of combining normative research and empirical research with the help of China's listed company data.The empirical results show that the reform of decentralization at the provincial level is positively related to bank credit and government has more effect on bank credit.On the base the difference of the debt financing,additional evidence finds that when the reform of decentralization is at the provincial level,government has more effect on long-term loans than short-term loans.The results show that reform of decentralization affects the debt financing of State-Owned Enterprise,and the local government has strong incentives and power to compel commercial banks to provide state-owned enterprises with favorable bank credit.