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

Author

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  • Chengke Zhu

    (School of Economics and Management, Huaibei Normal University, Huaibei 235000, China
    School of Economics and Management, Hefei University, Hefei 230601, China
    The authors contributed equally to this work.)

  • Lijing Shen

    (School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China
    The authors contributed equally to this work.)

  • Yanping Shi

    (School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China
    The authors contributed equally to this work.)

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.

Suggested Citation

  • Chengke Zhu & Lijing Shen & Yanping Shi, 2022. "Motivation Analysis of Market and Institution on Corporate Leasing Financialization from the Perspective of Regulatory Arbitrage: Evidence from Chinese Listed Companies," Sustainability, MDPI, vol. 14(19), pages 1-21, October.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:19:p:12581-:d:932542
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    References listed on IDEAS

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    1. Jin, Xiao Meng & Mai, Yong & Cheung, Adrian Wai Kong, 2022. "Corporate financialization and fixed investment rate: Evidence from China," Finance Research Letters, Elsevier, vol. 48(C).
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    3. Thomas J. Finucane, 1988. "Some Empirical Evidence On The Use Of Financial Leases," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 11(4), pages 321-333, December.
    4. Ezzell, John R. & Vora, Premal P., 2001. "Leasing versus purchasing: Direct evidence on a corporation's motivations for leasing and consequences of leasing," The Quarterly Review of Economics and Finance, Elsevier, vol. 41(1), pages 33-47.
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