Optimal capital structure and credit policy with bank-tax-guarantee

Chen，Biao1; Jiang，Jinglu2; Zhu，Nanhui3

2023-12-01

10.1016/j.frl.2023.104307

Finance Research Letters   Impact Factor & Quartile

1544-6123

We study the optimal capital structure, credit policy and investment strategy of a small- and micro-sized enterprise that funds the expansion investment by bank-tax-guarantee, an innovative financing pattern that utilizes the superimposed effects of bank tax cooperation and bank guarantee cooperation. We show that investment is accelerated by stricter tax supervision, and is first delayed and then accelerated as the degree of tax payment increases. The optimal leverage ratio decreases with the cost of tax evasion and the degree of tax payment. The loose credit policy reduces corporate debt scale, guarantee cost and optimal leverage ratio.

Bank-tax-guarantee Capital structure Credit policy

English

Corresponding

National Natural Science Foundation of China[72101212];Fundamental Research Funds for the Central Universities[JBK2304016];

2-s2.0-85167811731

Scopus

1.School of Finance,Southwestern University of Finance and Economics,Chengdu,China
2.Institute for Advanced Studies in Finance and Economics,Hubei University of Economics,Wuhan,China
3.Department of Finance,Southern University of Science and Technology,Shenzhen,China

Chen，Biao,Jiang，Jinglu,Zhu，Nanhui. Optimal capital structure and credit policy with bank-tax-guarantee[J]. Finance Research Letters,2023,58.

Chen，Biao,Jiang，Jinglu,&Zhu，Nanhui.(2023).Optimal capital structure and credit policy with bank-tax-guarantee.Finance Research Letters,58.

Chen，Biao,et al."Optimal capital structure and credit policy with bank-tax-guarantee".Finance Research Letters 58(2023).