Analysis on the influence of corporate financial conditions to regional credit growth in China

Abstract

Abstract

The difference in regional credit growth is an important factor explaining the difference of economic growth in Chinese provinces. Therefore, further research on the factors that form the difference in regional credit increase has important practical significance for exploring the balanced development of China's regional economy. Based on the theoretical hypothesis of corporate financial risk and bank credit decision-making relationship, this paper analyzes the problem of regional corporate debt growth level affecting regional credit growth. For this purpose, we establish the provincial-level panel data model from 1999 to 2014 in China. Empirical evidence that affects credit growth in China's provinces. This means that the difference in the level of corporate debt between provinces is an effective factor to explain the difference in China's inter-provincial credit growth. Therefore, the implementation of relevant fiscal and capital market support policies to effectively reduce the level of corporate debt in regions with higher debt ratios and optimize their capital structure. It will help the balanced growth of China's regional economy by narrowing the regional credit gap. Key words: credit growth rate, ratio of debt to assets