The Impact of Cross-Shareholding Networks on Financing Constraints --Empirical Data from Manufacturing Companies

Abstract

As the financial markets have evolved, the cross-shareholding networks have been formed among Chinese enterprises with equity as the concluded relationship. Exploring the impact of the cross-shareholding networks on financing constraints has important implications for the decisions of manufacturing companies. This paper uses the social network method to characterize the cross-shareholding networks of manufacturing companies from 2007 to 2019 and explores the effects of the cross-shareholding networks on financing constraints. The innovation of this paper is to explore the relationship between the two. It is concluded that the centrality or structural holes richness of manufacturing companies in the cross-shareholding network is inversely related to the financing constraint. The higher the centrality or the richer the number of structural holes, the lower the level of financing constraints.