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Deleveraging, Optimal Capital Structure and Real-Economy Enterprise Productivity

【Authors】
MA Caoyuan, ZHU Yufei
【WorkUnit】
Xi'an Jiaotong University, 710061.
【Abstract】

In the context of China's efforts to improve the efficiency of financial services for the real economy, it is of great theoretical value and policy implications to explore how deleveraging affects real-economy enterprise productivity and promotes high-quality economic growth. Based on the large sample data of Chinese manufacturing enterprises from 1998 to 2013, this paper constructs deleveraging variables at the micro level, and empirically studies the effect and mechanism of deleveraging on real-economy enterprise productivity. The study shows that deleveraging has a significant inhibitory effect on the productivity of real-economy enterprises. This conclusion is still robust after considering the sample selection bias, endogenous problems and replacement of the deleveraging indicator. Further research based on the optimal capital structure finds that deleveraging will only significantly inhibit productivity of real-economy enterprises with insufficient debt, but increase productivity of those with excessive debt. It means that the government should fully consider the structural problems while promoting deleveraging, and improve the efficiency of financial services for real-economy enterprises by adjusting the capital allocation between enterprises with insufficient and excessive debts.

 

JEL:D24, G32, M11

【KeyWords】
Deleveraging, Optimal Capital Structure, Real-Economy Enterprise Productivity, Trade-Off Theory