In the last couple of years, social financing costs have shot up in China despite an overall capital abundance and increasing market-based capital allocation. This paper has investigated overall financial cost and cap...In the last couple of years, social financing costs have shot up in China despite an overall capital abundance and increasing market-based capital allocation. This paper has investigated overall financial cost and capital cost ratio as two measurements of financing cost, compared financing costs of different channels, examined the relationship of risk premium, financial repression, interest rate liberalization, and resource occupation versus financing cost, and addressed the problem of high non-manufacturing cost. On such a basis, specific countermeasures have been proposed. The main conclusion of this paper is： The current high social financing costs primarily result from economic structural imbalance. The fundamental solution lies in continuing structural reform and credibility system development to eliminate barriers in the transmission of capital circulation policies such as expanding equity financing, relaxing market access formalities for small and micro financial institutions, and improving the bankruptcy system to give full play to the ＂survival of the fittest＂ mechanism of the market.展开更多
文摘In the last couple of years, social financing costs have shot up in China despite an overall capital abundance and increasing market-based capital allocation. This paper has investigated overall financial cost and capital cost ratio as two measurements of financing cost, compared financing costs of different channels, examined the relationship of risk premium, financial repression, interest rate liberalization, and resource occupation versus financing cost, and addressed the problem of high non-manufacturing cost. On such a basis, specific countermeasures have been proposed. The main conclusion of this paper is： The current high social financing costs primarily result from economic structural imbalance. The fundamental solution lies in continuing structural reform and credibility system development to eliminate barriers in the transmission of capital circulation policies such as expanding equity financing, relaxing market access formalities for small and micro financial institutions, and improving the bankruptcy system to give full play to the ＂survival of the fittest＂ mechanism of the market.
