Financing Cost,Financing Substitution,and the Profit Volatility of the Pawn-Broking Industry in China:Empirical Evidence and Theoretical Explanations
从企业融资成本角度解释中国典当业利润波动，发现中小企业融资需求驱动典当需求，宽松货币政策降低银行融资成本导致典当需求下降，紧缩政策则相反，实证支持这一假说。
This paper offers a possible explanation to the profit volatility of the pawn - broking industry in China from the perspective of firm financing cost.Using both firm survey and cross - country data,we find the pawn-broking industry in China is characterised by the fact that its demand is largely driven by the financing purpose of small and medium firms,which is distinct from other economies.Based on this finding,we construct and analyse a behavioural model of firm financing to find a key to the profit volatility.Our explanation is that the relaxed financial policies in China after the outbreak of the global financial crisis significantly reduced the financing cost through banks as opposed to the cost of financing through pawning which basically remained rigid.As a reasonable response,firms are inclined to borrow from banks instead of pawn - brokers,causing a plummet in demand for pawn - broking.Tight monetary policy has the opposite effect.The empirical relationship between the directions of macro policies and the profitability of the pawn - broking industry positively supports our hypothesis.