Research on the Impact of Bank Regulatory Penalties on Enterprises' Transition from the Virtual to the Real Economy

Yuan  Chen; Hongyu  Chen; Jie  Wang

doi:10.54691/g9gzw946

Authors

Yuan Chen
Hongyu Chen
Jie Wang

DOI:

https://doi.org/10.54691/g9gzw946

Keywords:

Bank regulatory penalties, From emptiness to reality, Corporate credit structure, Real economy.

Abstract

In recent years, China's financial sector has shown a tendency of "disenchantment from reality to emptiness", and some financial resources circulate in the system and fail to be effectively injected into the real sector, resulting in the weakening of the support efficiency of financial services for the real economy. In response to this challenge, the Chinese government has strengthened financial supervision and guided funds back to the real sector through bank regulatory penalties. Based on the data of A-share listed companies in China from 2011 to 2020 and the relevant data of bank regulatory penalties, this paper explores the impact mechanism and effect of bank regulatory penalties on enterprises' "getting rid of falsehood to reality". The results show that: first, bank regulatory penalties significantly inhibit the level of enterprise financialization, manifested in the decline of the proportion of financial assets in total assets, which is steadily verified by benchmark regression, generalized double difference model (DID) and endogenous treatment. Second, the mechanism analysis shows that regulatory penalties play a role by optimizing the credit structure of enterprises: banks increase the supply of long-term loans, reduce the cost of corporate debt, and curb the scale of informal lending (such as entrusted loans and private lending), so as to reduce capital idling and promote enterprises to return to their main business investment. Based on this, this paper suggests improving the differentiated supervision mechanism, optimizing the credit structure, balancing financial innovation and risk prevention and control, and strengthening the coordination of fiscal and monetary policies to improve the efficiency of resource allocation. This study provides a theoretical and empirical basis for optimizing the financial regulatory framework and promoting the high-quality development of the real economy.

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