Motivation Analysis of Market and Institution on Corporate Leasing Financialization from the Perspective of Regulatory Arbitrage: Evidence from Chinese Listed Companies

Abstract

In recent years, more and more real enterprises speculate and arbitrage in the financial market by participating in financial institutions, and the financialization of micro enterprises has become a general trend. However, the empirical conclusions of existing literature from different dimensions of enterprise development are not consistent. This paper uses the data from Shanghai and Shenzhen A-share companies from 2007 to 2019 to perform an empirical analysis on the market and institutional motivations of the entity enterprises’ sharing and holding financial leasing companies (SHFL). It is found that the fundamental reason for enterprises to SHFL is the profit gap between the financial industry and the real industry. The more intense the industry competition, the lower the profit rate, the larger the spread, and the stronger the incentive to SHFL. In addition, the continuous improvement of the national system construction in the financial leasing industry has played an essential role in promoting it. In the heterogeneity analysis, it is found that private enterprises are also motivated to ease financing constraints except interest rate spread. On the contrary, they are not significant in the sample of state-owned enterprises. Equipment manufacturing industries have both narrowing interest rates and equipment promotion motivation, while the non-equipment manufacturing industry has no such characteristics. Finally, the limitations and future research directions of this paper are discussed.