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Corporate Financing Strategies under the Deep Reform of Interest Rate Marketization

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DOI: 10.38007/Proceedings.0000471

Author(s)

Jin Li

Corresponding Author

Jin Li

Abstract

2019 is an important year in the process of China's interest rate liberalization reform. On August 17, the central bank's No. 15 announcement reformed the pricing of new domestic loan interest rates, and the Loan Prime Rate (LPR) was officially launched. The purpose of this essay is to analyze the essential difference between LPR and The Benchmark Interest Rate For Loan in order to study whether the formal launch of LPR can substantially alleviate the problem of "financing difficulties and expensive financing" for enterprises; explore how different types of enterprises should implement financing strategies in the face of the new policy; analyze how to make good use of the obtained financing for later management and operation, so that the company continues to expand and develop. We collect extensive corporate financing success cases, combined with the latest policies, to discussion from the above three perspectives, finally put forward the in-depth reform of interest rate marketization. The uncertainty of interest rate will still bring different degrees of risk to enterprises. To a certain extent, the use of LPR for large-scale and stable enterprises will alleviate the problem of "expensive financing". But for enterprises in the early stages of development, there are many uncertainties in the enterprise itself, LPR may not help small, medium and micro private enterprises to alleviate the problem of "difficult financing, expensive financing".

Keywords

Interest Rate Marketization; LPR; Financing Strategies; Corporate Financing