Category: Money tips Release Date: 2006-11-10
Loan amount, duration and ensure that the financial situation of the type of business
Creditor's supervision is an important issue in corporate governance. In China, due to less well-developed corporate bond market, bank loans, corporate finance to become one of the most important way. As a major bank lenders can play an oversight role of our concerns.
In general, banking supervision is concerned about the content of the core business activities to understand the financial position to predict the possibility of corporate default or bankruptcy. In this process, the bank is monitoring the largest corporate financial information. Banks in the analysis on the basis of this information to make lending decisions related to matters such as duration of the loan amount, guarantees that, as well as lending rates.
If there is effective supervision of banks behavior, the performance of its loan decision-making should be on the enterprise's financial position is sensitive, or that bank lending decisions and corporate financial condition that exists between a reasonable logic. Therefore, to observe whether a bank has a supervisory role, they should observe the bank's loan policy and business between the financial situation of the existence of a reasonable relationship. In addition, the direct observation of bank lending policies of what the consequences would be business, but also observe the effectiveness of a banking supervision perspective.
Our research is designed according to this line of thinking. First of all, we are the number and duration of bank loans have been studied, examined the short-term loans and long-term loan amount and changes in the sensitivity of the financial situation of enterprises, and secondly, study the types of mortgage loans, guarantees and credit of the sensitivity of the financial situation of again to study the pricing of the loan (ie interest rates) and the financial situation of relations. Finally, the analysis of the number and duration of bank loans, enterprise value and impact of its accounting results in order to judge the validity of China's banking supervision.
First of all, from the loan amount, duration and ensure that the financial situation of the type of business to start research.
1. Research hypothesis
Suppose 1a: banks can be realized through an incremental loan loan companies monitor the financial condition, performance in the enterprise's short-term bank loans to incremental changes in the relative short-term bank loans for the current financial situation of enterprises may be more sensitive to the same long-term bank Incremental loans also have some sensitivity, but this long-term bank loan balance is less sensitive.
Suppose 1b: short-term loans and supervision will be better than the long-term loans, that the financial situation of the short-term model may be more sensitive.
Assumption 2: bank credit to the enterprise's financial position is more sensitive to the guarantee and mortgage loans less sensitive.
2. Research and Design
The sample for the period 1999-2002 in China Shanghai and Shenzhen-listed A shares of a bank loan company. In which short and long term bank loans data for manual collection, the source for the company's annual report and notes. The data mainly from the Genius database, and News Network (www.hexun.com), China Securities Regulatory Commission Web site (www.csrc.gov.cn) and other relevant websites and databases. Financial ratios CSMAR database data through the accounting statements of the number of listed companies is calculated.
3. Model
The basic form of regression model is as follows:
In order to test these assumptions one, respectively, the creation of four regression models: short-term loan balance model, long-term loan balance model, incremental model of short-term loans, as well as the incremental model of long-term loans. Y in these four models represent: Short-term loans (shbank), a long-term loans (lobank), short-term loans increment (Δshbank dummy variables), long-term loans increment (Δlobank dummy variables). When the Y on behalf of outstanding loans, used OLS regression method. When the Y incremental short-term loans on behalf of long-time, using LOGISTIC regression method. In order to test the hypothesis 2, for different categories of loan balances were set up and incremental models, when the Y on behalf of loan balance, the approach to using OLS regression. When the Y incremental short-term loans on behalf of long-time, using LOGISTIC regression method. When carrying out OLS regression with the year the stock of bank borrowing with the previous year's financial ratios and the associated control variables regression. Incremental model, the independent variables that change with the dummy variables, such as ΔCURTRT, meaning that when the variable number is greater than the previous year this year, when the number of take 1, take 0 otherwise.
4. The number of bank loans to the enterprise's financial position sensitive
(1) short-term loan balance of the model analysis of regression results
Table 1A sets of data. To reflect the financial position of the six indicators (indicators of asset-liability ratio due to high correlation with other variables without consideration), the two indicators reasonable significant correlation, but there are three there was a significant correlation between irrational. Hypothesis 1a part supported.
Firm size (LNTOAT) with the bank loan balance of a significant negative correlation. When the major shareholders of listed companies occupied more money when (RECUA), its bank loans less, which is the same as with the expected signs. Reflecting the strength of corporate demand for funds variable POSIT and short-term loans into a positive relationship, indicating the more in need of cash to listed companies, their access to bank loans is also more. Found no government subsidy for the relationship between short-term bank loans.
However, the audit opinion (AUDIT) and short-term loan balance was a positive correlation between this result means that enterprises were non-standard audit opinions issued by the bank issuing more short-term loans, rather than the standard advice usually means that there are some problems of listed companies, and the disagreed with the auditors. When the listed company's controlling shareholder is the state-owned shareholder (STCH), their access to short-term bank loans less. In addition, when a listed company at the end of a foreign security (COLLA), Litigation (LAWS) matter, but more access to bank loans. These more difficult to explain with existing theories.
(2) short-term loans for incremental model analysis of regression results
The model results in Table 1, C set of data. The results suggest, the model in general is also valid.
From the financial condition indicators, although the more financial indicators and the dependent variable and statistically significant relationship, but there is a reasonable relationship between this indicator is only ΔGROWTA line is positive, indicating that when the total assets of listed companies to lower growth , its short-term bank loans as well as reduce the amount, but the other five indicators ΔCURTRT, ΔCASHCD, ΔROE, ΔTURNTA, ΔDEBTRT has expressed the opposite relationship, that the above-mentioned lower liquidity, cash flow worse, the net return on equity decline in the rate of decline in the total return on assets and asset-liability ratio to rise, there is an upward trend in short-term bank loans.
There exists significant in terms of control variables, AUDTI showing a reasonable relationship, when listed companies were non-standard audit opinions issued, its short-term bank loans decrease. Not in conformity with the expected sign, when the ultimate controlling shareholder of listed companies, state-owned shareholder (STCH), its short-term bank loans will be reduced. This shows that the banks do not think that the ultimate controlling shareholder of non-state shareholders, business risk will increase.
A comparison group and the C set of data, we found that short-term stock model and incremental model is only a weak sensitivity, and the short-term incremental lending model results are not better than the stock of the results of the model. So, assuming that 1a did not receive short-term loans model checking support.
(3) Long-term loan balance model analysis of regression results
Table 1B sets of data. From the financial indicators, did not find there is a reasonable correlation between the indicators. In the table 5.10B group, only the asset-liability ratio (DEBTRT) Total assets turnover (TURNTA) and long-term loan balance to show a statistically significant, but its symbols are not in line with expectations. Asset-liability ratio is positively correlated, indicating that the higher the ratio, the higher the balance of corporate long-term loans. Total asset turnover ratio is negative correlation, indicating that the faster turnover of the enterprise, the smaller the amount of its long-term bank loans. Therefore we can say the stock of long-term loans to the enterprise's financial position is not sensitive.
In addition, the total assets (LNTOAT) and more large companies, banks tend to have long-term loans. Possible reasons are: a large company has strong anti-risk ability to operate in the longer term to maintain stability, it is a long-term bank loans to the choice of the object. Audit opinion (AUDIT) to demonstrate a reasonable relationship, that is, when listed companies are non-standard audit opinions issued, its long-term bank loans less. Other variables are not significant.
(4) Long-term loans for incremental model analysis of the regression results
Table 1D set of data. Seven financial indicators, there is a significant correlation between the only two. And that the two are in line with expectations, they are ΔGROWTA and ΔDEBTRT. It shows that when the total asset turnover ratio of listed companies become large, asset-liability ratio decrease, the amount of its long-term loans will increase. Compared to the stock model with long-term loans, long-term loans incremental model to demonstrate the financial situation of bank loans to enterprises with a certain sensitivity.
The other control variables from the point of view, the size of the variable (LNTOAT) expressed a positive correlation indicates that when the larger assets of listed companies and its long-term loans are also more with less, it seems contradictory with expectations. But the occupation of the shareholders funds (RECUA) is in line with expectations, showing a positive correlation, that is, when the listed companies, more funds have been occupied by the parent company, its long-term loans the greater the magnitude of the reduction. Other variables is not significant.
The above analysis, long-term bank loans for incremental enterprise's financial situation has some sensitivity, while the balance is not sensitive to long-term loans. Weak support for hypothesis 1a. From lending stock and incremental management point of view, this result is logical. This implies that in the current stock of long-term loans there are still many problems.
Comparison of short-term and long-term stock inventory model we found that the former than the latter more sensitive, but relatively short-term incremental and long-term incremental, we found that the sensitivity of the long-term seems to be more incremental. The results suggest that this contradiction, assuming that 1b was not supported, namely the short-term loans are not necessarily more sensitive than the long-term loan.
5. Bank loan types on the sensitivity of the financial situation of enterprises
We are a listed company's stock of bank loans into mortgage, guarantee, credit three categories, and to the value of each category and the corresponding control variables and financial ratios OLS regression to verify the different types of bank loans, the financial situation of the enterprise sensitivity is also different.
1) The three kinds of loans for types of short-term loan balance under the model of regression analysis
From the regression results, the three types of short-term loans to the enterprise's financial position to guarantee the most sensitive, followed by mortgages, credit the least sensitive. This result does not seem to support hypothesis 2. From the trend point of view, it is a listed company with a variety of loans in the proportional share of loans, secured loan listed companies accounted for the most, while the least credit. However, we note that non-financial control variables from the point of view, the most reasonable credit, while the mortgage and guarantee, are more reasonable. This reflects the issuance of bank credit is still relatively non-financial indicators of value, but the mortgage and secured loan, this reason is not yet reflected.
2) three types of loans for long-term loan balance under the model of regression analysis
Mortgage loans, and long-term loans have a significant relationship between financial indicators 2, but their relations are unreasonable. Other control variables, only the amount of funds used to measure the major shareholder of indicators RECUA with the dependent variable statistically a relationship that major shareholders of listed companies has been occupied more money, their access to mortgage the less.
In the secured loans, and long-term loans have a significant relationship between the financial targets in the two is reasonable and unreasonable 2. Secured loans in the model with the dependent variable related to control variables are: the size of LNTOAT positively related to litigation LAWS positively related to audit opinion on the AUDIT negative correlation, capital intensity POSTI positive correlation. In addition to litigation (LAWS), the other three have a reasonable correlation.
In credit loans, and long-term loans have a significant relationship between financial indicators 2, but all unreasonable. Credit model with the dependent variable related to control variables are: LNTOAT positively related to (reasonable), RECUA positive correlation (unreasonable).
Compared three types of loans, we find that, (1) whether long-or short-term secured loan, the financial situation of the sensitivity were higher than the other two categories. In contrast with the hypothesis 2. (2) Long-term loans does not matter what form is more sensitive than the short-term loans. Still do not support hypothesis 1b.
3) The three kinds of loans for types of short-term loans under the incremental model regression analysis
According to regression results, we found that short-term credit is not sensitive to incremental, short-term mortgages and guarantees incremental there are some sensitivity. This is still with the two opposite assumptions.
The above amount of bank loans to enterprises on the financial situation of the sensitivity of the discussions: (1) short-term stock model and the incremental model is only a weak sensitivity, and short-term incremental lending model results are not the results more than the stock model good; (2) long-term bank loans for incremental enterprise's financial situation has some sensitivity, but less sensitive to the balance of long-term loans. So, assuming that only received weak support 1a. (3), it seems better than short-term loans are more sensitive to long-term loans to enterprises, assuming that 1b is not supported.
With regard to the type of bank loans the sensitivity of the financial situation of the enterprise can also be attributed as follows: collateral, guarantees and credit the stock of three kinds of loans compared to short-term secured loans to the financial situation of the enterprise's most sensitive, followed by mortgages, credit the least sensitive. Similarly, the long-term loans are secured loan has a relatively strong sensitivity to the other two types of less-sensitive; this order inconsistent with the hypothesis 2.
Thus, the banks through loans to reflect the number and type of enterprise business performance monitoring assumption was not supported
Loan pricing with the enterprise's financial situation
1. Research hypothesis
Assumption 3: Bank loan pricing in a certain extent, can reflect the future of the banks towards corporate credit and risk monitoring, reflected in the lending rates the current financial situation of enterprises have a certain sensitivity.
2. Model
In order to test hypothesis 3, we designed the two interest rate models: short-term rates, long-term interest rates. The following formula as a model of the basic expressions:
INTER variable interest rate data used in the year, while other financial ratios, the control variables are used on a one-year data.
In which the variables are defined as follows:
INTER short-term rates in the model calculated by the formula, in which each type of int for listed companies short-term lending rate, the category includes mortgage, guarantee, credit, debt for the exact amount of such loans, totdebt for short-term loans; long-term interest rates INTER model calculated by the formula, in which each of listed companies int a number of long-term loan interest rates, debt for the exact amount of the loan, totdebt of the total amount of long-term loans
3. Interest Rate Model Regression Analysis
(1) Short-term interest rate model
Table 2 A set of data showed that short-term lending rates on the financial situation has a certain sensitivity. There is a reasonable lending rates and short-term correlation between the financial indicators include: asset-liability ratio (DBRTRT), coefficient sign is positive, significant at the 5% level of significant; the net return on assets (ROE), coefficient sign is negative, at 1% significant level of significant. Of assets and liabilities on behalf of corporate solvency ratio (DBRTRT) higher, indicating repayment of bank loans, the lower level of assurance, enterprises can be profitable lending rates also higher; reflect the business performance of the ratio of net capital gains (ROE) more high, indicating stronger profitability, loan interest rates lower. Other financial ratios and short-term lending rate at a statistically significant relationship does not exist, that there is no correlation between irrational.
(2) Long-term interest rate model
From Table 2, B-group data, long-term lending rates on the financial situation of some degree of sensitivity. There is a reasonable correlation between the interest rate of financial indicators are: Current Ratio (CURTRT), a significant negative correlation; operating cash flow / current liabilities (CASHCD), a significant negative correlation; total asset turnover (TURNTA) a significant negative correlation. Other targets were not statistically significant, there was no other reasonable correlation.
Integrated short-term rates and long-term interest rates two models we can see that two kinds of interest rates on the financial situation of enterprises have a certain degree of sensitivity, there is a reasonable correlation. So, assuming that three proven
Conclusion of the study
â—?China's bank loans to enterprises have a certain supervisory role, mainly through lending rates to reflect the pricing, through loans to reflect the change in control is not obvious.
â—?the effectiveness of the supervision of bank loans and loans in the form of certain relations. Mortgage, guarantee and credit of three forms to guarantee the financial situation of the enterprises to be slightly stronger degree of sensitivity of some.
â—?number of non-financial indicators such as large shareholders accounting section, the audit opinion, companies have secured and litigation behavior indicators and bank loans have some reasonable relationship to the decision-making, indicating non-financial indicators of banks to give a certain amount of attention.
â—?Large corporate lender oversight will bring certain economic consequences. Long-term loans useful for increasing corporate value, while the short-term loans to enterprises next year's ROE has a negative impact.
Recommendations
According to previous findings, we propose the following suggestions:
â—?China's bank loans to enterprises have a certain supervisory role, mainly in the interest rate on the loan pricing, performance in the long-term or short-term lending rates, whether the current financial situation of enterprises are more sensitive, but the number and type of loans are not sensitive to this. This suggests that bank loans to business monitoring tool is still relatively weak, passive. In an enterprise's financial position is not the case of raising interest rates, and can not guarantee the future be able to recover the loan. This approach may be "lost, watermelon, picking up a sesame."
â—?on bank lending practices survey found that the loan contract is simpler, less restrictive terms, this type of research from the Loan available circumstantial evidence. Once the enterprise's financial situation has deteriorated signs, in addition to loans secured by collateral, the banks seem to be difficult to take proactive measures to maintain the claim. We recommend that on the one hand, banks are required to strengthen the management of the loan contract, in the contract were designed to safeguard their rights which are conducive to the terms of the future in order to strengthen monitoring of loans to business activities; the other hand, in the enterprise corporate governance structure, banks are required to take the initiative to strive for a place big lenders in order to fundamentally enhance the credit quality control.
â—?This study found that bank loans and some non-financial indicators there is a reasonable relationship between, for example, accounted for the majority shareholder shall more incremental long-term loans and loan interest rates showed a downward trend, but also found the situation confusing , such as the short-term loans and corporate guarantees and litigation into a positive relationship; nonstandard audit opinions have more short-term corporate loans, and access to lower short-term lending rate trends. This shows that banks attach non-financial indicators are to be improved, suggested that all banks these non-financial indicators into quantitative risk assessment model, the combination of financial indicators, comprehensive judgments.
â—?pairs of regulatory authorities, the control of the bank non-performing loans, first of all from its formation mechanism of the micro-analysis studies, such as the above-mentioned loan contracts, rights protection practices, risk assessment models, from these levels to monitor and evaluate every one bank, This can encourage banks to improve their management level and competitiveness, it can also allow regulatory agencies to play their true effectiveness.
The economic consequences of bank loans
1. Research hypothesis
Hypothesis 4: the amount of bank loans and businesses will exist between the value of a positive relationship.
Sub-hypothesis 41: As the long-term loan supervision is less than short-term loans, so the value of long-term loans to enterprises increased role will be significantly less than short-term loans.
Sub-hypothesis 42: As the long-term loans under the loans will not bring short-term liquidity risk, and the right management to over-investment is more than short-term loans to "hard" binding effect, it is long-term loans to enterprises increased the value of the role will be more than short-term loans .
2. Model and Variables
In order to test hypothesis 4 and its two sub-assumptions, we set up two models:
First, the economic consequences of short-term loans model:
Second, the economic consequences of long-term loans model:
With regard to enterprise value, we use two indicators: Tobins Q and net return on assets (ROE). With Tobins Q as the dependent variable regression, then the bank loan from a variable selection of a listed company, "the year" in the amount of bank loans. Using ROE as the dependent variable regression, then the bank loan from a variable selection of listed companies "the previous year" the amount of bank loans, because we have to examine the economic consequences of bank loans, that it would be the next phase of impact on the performance of accounting. The Tobins Q is the market value of listed companies and asset replacement cost ratio, implied the market's reaction to bank loans, including. If the market is efficient, the impact of bank loans will be immediately reflected in stock prices, so the right Tobins Q's return, we choose the amount of current bank loans.
Lobank respectively Shbank and short-term bank loans and long-term bank loans to total assets ratio, MORT said that short / long-term mortgages and short-term / long term loans ratio, SECU was secured loan accounted for in the short run model, they are short-Jie Wei , long-term model, Jie Wei a long-term. LNTOAT assets of listed companies the size of response variables. IND on behalf of the industry, AREA for regional, YEAR for the year
3. Result Analysis
Comparison of regression results, the short-term loans and reflect the enterprise value there is no correlation between Tobin's Q, while the long-term loans are a significant positive correlation. It can be certain that the establishment of 42 sub-hypothesis, sub-hypothesis does not hold 41. And the establishment of 42 sub-hypothesis, assuming that four are bound to set up. This shows that the debt financing for the improvement of corporate value, relying mainly on the management of claims of excessive investment in hard constraints, but also the supervision of banks to enterprises, but the bank's supervisory role in the short-term loans due to their liquidity problems brought about by The two-phase offset.
From the statistical results, short-term loans for the next year's ROE There was a significant negative correlation (coefficient -0.818). Can be seen that listed companies are more short-term loans for the next period, the greater the negative impact of ROE. But the long-term loans for listed companies next year, the impact of ROE model in general is not significant.
