The Impact of Marketization on Enterprise Performance from the Perspective of Enterprise Debt

Abstract

The problem of corporate debt is a hidden danger to China’s economic growth and financial stability. This paper studies the effect of regional marketization on the debt burden of the local enterprises based on a fixed effects model. The result demonstrates that the higher the market-oriented degree, the lower the debt burden of the enterprises in that region. Further analysis demonstrates that the improvement of marketization not only directly reduces the enterprise debt, but also reduces debt burden by increasing the enterprise productivity and promoting the enterprise property rights reform. Improving the level of regional marketization is conducive to the enterprise debt issue, and this provides some suggestions to the policy makers.