Financing Channels Research Articles

Research on Financial Risk Management of Electric Power Enterprises under the "Dual Carbon" Background

Under the "dual carbon" background, the power industry, as one of the pillar industries of China's national economy, is undergoing a critical transformation. It is shifting from a traditional power generation model based on fossil fuels to one that utilizes non-fossil fuels, such as wind, solar, and hydropower. The operational development of China's power industry is significantly constrained by a series of policies, including power system reform and electricity price regulation, which has placed a burden on power companies and may lead to corresponding financial risks. This paper analyzes the issues in financial risk management of power enterprises under the "dual carbon" background from three aspects: enterprise financing channels, debt-to-asset ratio, and operating costs. Targeted measures to improve the management of financial risks are proposed, such as constructing diversified financing channels, optimizing asset management efficiency, and enhancing cost management levels, in order to provide valuable insights for financial risk management in power enterprises under the "dual carbon" framework.

Behavioral analysis of loan decision-making and influencing factors among food-producing new agricultural operating entities in China

The inherent fragility of the agricultural industry significantly restricts the financing channels available to new agricultural operating entities. Access to credit loans emerges as a pivotal means to address capital shortages among farmers and enhance production inputs. Drawing on survey data from 17,745 new agricultural operating entities engaged in food production in Lu’an City, Anhui Province, and agricultural households documented in the China Household Finance Survey Database, this paper employs the Logit model and the Heckman selection model to empirically analyze the loan decision-making behavior of these entities from two perspectives: loan willingness and credit scale. The research reveals that several key variables exert a significant positive influence on the borrowing willingness of grain producers. Specifically, the planting area range, input range per hectare, the rate range of return on investment, membership in cooperatives, and operation as a family farm all notably enhance their willingness to seek loans. Conversely, the net income per hectare and the number of crop types cultivated significantly diminish their inclination to borrow. Additionally, male operators and those with higher educational backgrounds demonstrate a stronger willingness to obtain loans. Furthermore, the study indicates that the planting area and membership in cooperatives also positively correlate with the scale of loans secured by these agricultural operating entities. Therefore, from the perspective of food security, it is essential to cultivate food-producing new agricultural operating entities. This requires a focus on the counter-cyclical adjustment of financial support, increasing credit support during years of low investment returns. Additionally, it is necessary to develop multiple forms of moderate-scale operations, enhance policy support, and boost the production enthusiasm of food-producing new agricultural operating entities.

Outsourcing Bank Loan Screening: The Economics of Third‐Party Loan Guarantees

AbstractWe provide the first theoretical and empirical study on third‐party loan guarantees, a prevalent financing channel worldwide for small borrowers. In our model, the project default probability is unobservable but can be probabilistically discovered with a screening cost. Guarantors, who are more cost‐effective in screening than banks, investigate borrowers and facilitate the financing of borrowers with insufficient collateral. Our data support this outsourcing theory: guarantor's risk measure predicts firms' default losses. Patterns of guarantee fees and loan rates are consistent with model predictions. Our findings illustrate how guarantors produce information and increase the efficiency of small business lending.

Remittances and Inequality in Jamaica

ABSTRACT Remittance inflows (remittances) to Jamaica have shown steady growth after slumping during the 2007–2009 Great Recession. At the same time, inequality, measured as the share of pretax national income held by the top 1% of earners, has remained stubbornly high. We employ quadratic match-averaging and the bounds-testing approach to cointegration from 2010 to 2019 to elucidate the dynamics between inequality and remittances. There are two central findings. First, we find cointegration running from remittances per capita to inequality. Second, a 1% increase in remittances per capita is associated with a 0.278% reduction in income inequality in the long run. One policy implication of our finding is that policymakers could consider strengthening financial channels for remittance transfers; this can improve the accessibility and effectiveness of these inflows in reducing income inequality.

Driving Impact of Sci-Tech Finance on Companies’ Green Productivity: An Empirical Analysis Using High-Dimensional Fixed Effects and Difference-in-Differences Models

Achieving high-quality economic performance and cultivating new quality productive forces are important goals of the Chinese government currently. Green development serves as a foundation for high-quality economic performance, where new quality productive forces are essentially green productivity. Sci-tech finance refers to a financing framework aimed at fostering technological innovation and advancing the commercialization of R&D achievements. To investigate how the development of Sci-tech finance influences companies’ green productivity, this research utilizes panel data from listed companies in Zhejiang Province from 2007 to 2021, using high-dimensional fixed effects model and difference-in-differences model. The findings reveal that Sci-tech finance plays a crucial role in boosting companies’ green total factor productivity, encouraging green patent applications, and driving the cultivation and growth of green productivity. Heterogeneity analysis shows that the impact of sci-tech finance is particularly significant in high-income regions, private companies, small and medium-sized enterprises, and firms not audited by the Big Four accounting firms. Furthermore, by constructing a quasi-natural experiment, it is verified that the “Pilot policy for synergizing technology and finance” considerably boosts the green productivity of companies in pilot cities. Finally, the research makes policy proposals for the growth of green productivity in companies, such as strengthening Sci-tech finance policy support, promoting regional coordinated development, and providing more financing channels for small and medium-sized companies.

Green Securitization, A Legal Structure Currently Unfit for Ecological Transition

Abstract Ever since the 2007–2008 financial crisis, the European banking sector and its regulating authorities have been seeking to revive securitization markets in Europe. The most recent attempt in this direction is the inscription of green securitization in the European sustainable finance agenda. Building on Katharina Pistor’s work on the legal coding of capital as well as Eve Chiapello’s work on financialization as a socio-technical process, our proposed contribution focuses on the legal structuring of green securitization. Based on the legal documentation and sustainability frameworks of four recent green securitization deals tied to energy-efficiency home improvements, it critically examines the new kind of financial circuits that is being constructed to channel funds towards projects deemed to create positive impacts on the environment. Our analysis shows that green securitization’s current legal structure fails to properly incorporate sustainability considerations, whether in its contractual terms, financial metrics, or parties involved.

An African perspective to biodiversity conservation in the twenty-first century.

Africa boasts high biodiversity while also being home to some of the largest and fastest-growing human populations. Although the current environmental footprint of Africa is low compared to other continents, the population of Africa is estimated at around 1.5 billion inhabitants, representing nearly 18% of the world's total population. Consequently, Africa's rich biodiversity is under threat, yet only 19% of the landscape and 17% of the seascape are under any form of protection. To effectively address this issue and align with the Convention on Biological Diversity's ambitious '30 by 30' goal, which seeks to protect 30% of the world's land and oceans by 2030, substantial funding and conservation measures are urgently required. In response to this critical challenge, as scientists and conservationists working in Africa, we propose five recommendations for future directions aimed at enhancing biodiversity conservation for the betterment of African society: (i) accelerate data collection, data sharing and analytics for informed policy and decision-making; (ii) innovate education and capacity building for future generations; (iii) enhance and expand protected areas, ecological networks and foundational legal frameworks; (iv) unlock creative funding channels for cutting-edge conservation initiatives; and (v) integrate indigenous and local knowledge into forward-thinking conservation strategies. By implementing these recommendations, we believe Africa can make significant strides towards preserving its unique biodiversity, while fostering a healthier society, and contributing to global conservation efforts.This article is part of the discussion meeting issue 'Bending the curve towards nature recovery: building on Georgina Mace's legacy for a biodiverse future'.

An Investigation of Site Selection Decisions of Residential Development Projects in Hangzhou Based on Potential Market Segmentation

Since 2016, strict regulatory policies have limited the size and financing channels of China’s urban real estate market. To adapt to the new situation, real estate developers need to adjust their development strategies and adopt more precise investment methods. In this respect, cost reduction, an accurate market positioning, and conducting detailed market research are particularly crucial. Given that the uneven development of the urban housing market has exacerbated urban segregation, urban residential space was subdivided into multiple potential submarkets. This study focuses on the land acquisition and the development of commercial residential projects in Hangzhou, China, from 2003 to 2022. Using the latent class analysis method based on the discrete choice model, the potential submarkets of Hangzhou’s housing development market are identified, and the project positioning and land selection preferences of developers are assessed. The results show that Hangzhou’s residential projects can be divided into five potential market categories: high-rise basic demand dwellings, high-end-improvement-type dwellings, luxury low-density dwellings, primary-improvement-type dwellings, and large-scale mixed-density dwellings. The importance of different land elements for developers when developing various types of projects is evaluated by calculating the willingness-to-pay coefficient. The findings of this study provide a comprehensive perspective for the government, real estate developers, and property owners to better understand the development dynamics on the supply side of the real estate market.

Research on the Improvement Path of Financing Constraints for Small and Medium-Sized Enterprises Empowered by Digital Transformation

This paper, based on literature related to big data and corporate financing, analyzes and explores the mechanisms and effects of big data technology in alleviating corporate financing constraints. As is known to all, Financing constraints have always been an important factor restricting the development of small and medium-sized enterprises, and digital transformation provides new ideas to alleviate this problem. The current situation of financing constraints is apparently complex and diverse, which is involving multiple aspects such as information asymmetry, limited financing channels, high financing costs, policy and market environment, as well as enterprise ownership and industrial structure.It argues that big data technology, with its powerful data processing and analytical capabilities, effectively reduces information asymmetry, broadens financing channels for enterprises, and significantly lowers the costs of debt and equity financing, thereby alleviating corporate financing constraints. Digital transformation not only enhances the profitability and sustainability of small and medium-sized enterprises but also strengthens investor confidence by improving market transparency and risk management capabilities, providing strong support for corporate financing.

COVID-19 and Firm Debt Financing: Evidence from China

ABSTRACT This paper explores the effects of the coronavirus disease (COVID-19) pandemic on firm debt financing. Using a novel COVID-19 sentiment index, our estimation shows that the pandemic led to an increase in loans and a drop in debt financing cost and trade credit. We contend that the government support, which provided more financing channels, and increased default risks, which placed barriers on trade credit, are the plausible mechanisms through which the COVID-19 pandemic affects firm debt financing capacity. Heterogeneity analyses show that external financing was easier for firms subject to stringent financial constraints and intense market competition despite their lowered trade credit.

The Impact of Internet Finance and Diversified Financing Models on the Development of the Sports Industry

With the growth of the sports industry, the demand for financing has been increasing, while traditional financing channels are facing limitations. The emergence of Internet finance has provided new opportunities for the sports sector. This paper focuses on the diversified financing pathways for the sports industry, supported by internet finance, exploring its impact through theoretical analysis, constructing a regression model for empirical research, and conducting case analysis. The study finds that the development scale of Internet finance and the crowdfunding financing model significantly influence the income of the sports industry. Accordingly, the paper offers relevant policy and application suggestions, aiming to provide a reference for optimizing financing within the sports industry through Internet finance.

An Overview of the Impact of Financial Technology Development on the Real Economy

Financial Technology (FinTech) is leading profound and significant changes in the structure of the global economy at an unprecedented speed with a thunderous momentum. It has subversively reconstructed the operation mode of the traditional financial industry and sown extensive and far-reaching seeds of change in the real economy. This paper aims to comprehensively and deeply scrutinize the multidimensional and omnidirectional impact of FinTech development on the real economy. FinTech has played a vital role in promoting the prosperity of the consumer market, effectively stimulating the vigor of consumption; at the same time, it has opened new channels of financing for small and medium-sized enterprises (SMEs), effectively alleviating the bottleneck of the funding that they have been facing for a long time. In addition, FinTech has significantly improved the overall efficiency of financial services, enabling financial resources to flow more efficiently and conveniently. In optimizing the efficiency of capital and resource allocation, FinTech also shows strong potential to help resources achieve better allocation. More importantly, FinTech has actively stimulated innovation and entrepreneurship, injecting a new powerful impetus for economic development.

Current Status and Prospects of Direct Hydrogen Production from Seawater in China

This paper summarizes the current research status and future outlook of direct hydrogen production technology from seawater in China. With the growth of global energy demand and prominent environmental problems, hydrogen energy has been attracting attention as a kind of clean energy. The research on direct hydrogen production from seawater in China involves various fields such as electrolysis of water, photoelectrochemistry, electrocatalysis, membrane technology and polygeneration technology, and has made progress in demonstration projects, joint test bases, system integration and optimization, and industrial chain development. Technology application scenarios include offshore oil platforms, coastal islands, ocean development and protection, emergency energy supply and industrial parks. Looking ahead, China will focus on technology development priorities such as high-efficiency catalysts, advanced membrane technology, intelligent control systems, optimization of multi-generation technology, application of new energy integration technology, exploration of low-cost materials and improvement of seawater pretreatment technology. At the same time, it will promote the large-scale application and industrialization of seawater direct hydrogen production technology by constructing large-scale demonstration projects, perfecting industrial chain, expanding policy support and financing channels, strengthening international cooperation and technical exchanges, building human resources, as well as market promotion and application scenario expansion.

The Impact of Financial System Reform on the Investment and Financing Behavior of Enterprises

As a crucial measure in our country's economic transformation, financial system reform has been a key driver of economic development since the inception of reform and opening-up. Against the backdrop of an increasingly complex global economy, traditional financial systems can no longer meet the diverse investment and financing needs of enterprises. Reform is urgently needed to address issues such as uneven capital allocation and difficulties in financing, creating a more relaxed and efficient investment environment for businesses. The initial intention of the reform is not only to promote the healthy development of financial markets but also to optimize the allocation of financial resources, thereby supporting enterprises in achieving sustainable long-term growth amid intense market competition. With the ongoing deepening of financial system reforms, financing channels for enterprises have become more diversified, financing costs have significantly decreased, and investment efficiency has markedly improved. These changes undoubtedly provide a solid foundation for business growth. However, the reform also brings a series of new challenges; navigating opportunities and avoiding risks in a complex financial environment has become a pressing issue for enterprises.

A Study on the Impact of the Belt and Road Initiative on the Global Financial System

Since its inception, the Belt and Road Initiative (BRI) has significantly influenced the development of the global financial system. This study mainly explores the specific measures and achievements of the BRI in promoting global financial market connectivity, the construction of diversified financing channels, and addressing financial risks. The research analyzes the progress made through the establishment of cross-border payment and RMB settlement systems, which enhance transaction efficiency, reduce costs, and promote the internationalization of the RMB. It discusses how diversified financing tools, such as the Silk Road Fund and the Asian Infrastructure Investment Bank (AIIB), provide financial support for infrastructure development and economic cooperation, as well as their role in fostering regional economic integration. The study also emphasizes the challenges and strategies for financial risk management and regulatory coordination under the BRI. By strengthening financial market connectivity, promoting diversified financing, and enhancing financial risk management, the BRI has improved the stability and sustainability of the global financial system.

Can stock market always act as a ‘barometer’ for industrial system? An analysis on the connectedness between production and return spillover networks

ABSTRACT This study investigates whether the stock market consistently acts as a ‘barometer’ for the industrial system by employing the complex networks theory. We propose a network of production spillovers for the system and a network of return spillovers for the market and then calculate network similarity to explore the connectedness between them. We acquire the following discoveries. On the one hand, there is a weak connectedness between the network structure of production spillovers and that of return spillovers, with the former and latter showing ‘core-periphery’ and ‘uniformity’ associations, respectively; meanwhile, the effects of production shocks on the system are symmetrical, whereas those of return impacts on the market are asymmetrical, suggesting a weak connectedness between them. These confirm that the ‘barometer’ function of the market exhibits low effectiveness. On the other hand, the major events with a direct impact on the production of enterprises, e.g. Covid-19, US–China Trade Friction, Bank Liquidity Crisis and Strict Financial Regulatory Policies, lead to an increase in the connectedness between the system and the market; conversely, those causing indirect shocks through financing channels, like Stock Market Crash, result in a decrease. These verify that the ‘barometer’ function strengthens amidst some major events while weakens during others.

Analysis of Financing Channels of Real Estate Companies in China

With the continuous development of China's economy, the real estate industry plays an important role in it, which witnesses booming growth. However, with its rapid development, it has also brought great problems and challenges, such as blocked funding sources and high financing costs. Therefore, this article will study the financing channels of several listed real estate companies, China Fortune Land Development CO, Poly Development Co., Ltd. since 2014 to 2018, comparing and analyzing the financing channels of private and state-owned enterprises. By extracting information about funding costs and risks from financial and public debt information, the differences in WACC values, cash flow status, and debt structures under different companies' financing plans will be compared. Accordingly, this study investigated possible reasons of choices made by these two enterprises. Enterprise decision-makers still need to make sufficient understanding and weigh the pros and cons before making financing decisions and should not finance blindly. These results of this article have reference significance for the financing of future real estate companies.

Convertible Bonds: A Supplementary Exit Path for Private Equity Funds

With the rapid development of China's economy, private equity funds have become an important force to help unlisted small and medium-sized startups quickly become bigger and stronger. As an important financing channel for enterprises, private equity funds can provide a large amount of financial support for target enterprises, and in all aspects of their investment operations, the choice of exit method is particularly important as the core link that directly affects returns. Therefore, this paper takes the case study as the research method, and selects SoftBank Group's gradual reduction of Alibaba shares through the issuance of convertible trust bonds as a case study, and studies the use of convertible bonds as a supplement to the IPO exit method of private equity funds. The study finds that convertible bonds, as a supplement to the IPO exit method, have more efficient, lower risk and low cost financing capabilities, effectively solve the problem of single exit path, improve the speed of private equity fund exit liquidation, and reduce the loss range while retaining the profit growth space.

Does R&D make stocks lottery-like?

Using data from Chinese A-share listed companies from 2008 to 2021, this study examines investors' preferences toward research and development (R&D) and their effect on corporate innovation. The study finds that R&D is positively associated with the characteristics of the stock lottery, and this relationship is not caused by historical performance or information asymmetry, indicating that investors may treat R&D as a lottery. Compared with capitalized R&D expenditures, expensed R&D expenditures demonstrate more substantial effects on lottery characteristics. Furthermore, investors' gambling preferences for R&D promote corporate innovation, independent of investor sentiment and mainly achieved through nonfinancing channels. From the perspective of financing channels, debt financing is more effective in enhancing innovation output than equity financing in Chinese capital markets.

SMALL AND MEDIUM-SIZED ENTERPRISES IN PRC UNDER CRISIS

The research examines the effects of the ongoing global crisis on small and medium-sized enterprises (SMEs) in the People’s Republic of China (PRC). It emphasizes the underlying causes and the resultant challenges stemming from the contraction of export markets, which include diminished export orders, escalating operational costs, reduced productivity, an increase in business closures, a significant rise in unemployment, eroded investment confidence, disrupted funding channels, and limited resources. Furthermore, the paper provides an initial evaluation of the countermeasures implemented by the PRC government, particularly its support initiatives for SMEs, while also addressing the challenges encountered in the execution of these policies. The research offers policy recommendations aimed at enhancing the growth of SMEs, proposing relevant strategies such as tax reductions for SMEs, the enhancement of service frameworks, and the fortification of self-development mechanisms within these enterprises.