Research on the Relationship between Short Selling Mechanism and Enterprise Loan

Rui Zhai ()
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Rui Zhai: Yunnan University of Finance and Economics, School of Statistics and Mathematics

A chapter in Proceedings of 2025 2nd International Conference on Applied Economics, Management Science and Social Development (AEMSS 2025), 2025, pp 293-300 from Springer

Abstract: Abstract Shanghai and Shenzhen stock markets in China officially launched the trading pilot of margin trading on March 31, 2010, marking the formal introduction of short selling mechanism into China’s capital market. With the implementation of the short-selling mechanism, China’s capital market will usher in major changes, which will help prevent and control the potential financial risks caused by corporate debt defaults.In order to understand the real relationship between the short selling mechanism and the corporate loans, this paper takes the margin financing system implemented in China’s capital market in 2010 as an entry point, adopts the first-order difference method for regression, and systematically tests the influence of the relaxation of short selling constraints on bank credit decisions. It is found that after the short-selling constraint is relaxed, the operating risk and information risk of the target company will change, and a larger amount of credit can be obtained; Banks also tend to issue broad credit policies to target companies and make positive credit decision adjustments.

Keywords: Short mechanism; First order difference method; Business risk; Information risk; Bank credit decision (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-752-6_31

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DOI: 10.2991/978-94-6463-752-6_31

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