Short-term cross-border capital flows and corporate leverage ratio: China's empirical evidence and enlightenment

Abstract

In consideration of increasing global economic uncertainties and the leverage ratio of non-financial corporate sector in China reaching a historical peak, this paper uses the parallel multiple mediation model to analyze the mechanism and impact of cross-border short-term capital flows on non-financial corporate leverage in China, in which corporate borrowing and asset price are taken as mediators in parallel multiple mediation model. The research findings indicate that the influence of short-term cross-border capital flows on corporate leverage ratio in China is mainly through the direct path. The influence of the two indirect channels is relatively weak, in which the size of corporate borrowing is more influential than corporate asset price. The indirect impact of short-term cross-border capital flows on corporate leverage ratio is more significant for state-owned enterprises compared to non-state-owned enterprises.