The integration of industry and finance, related party transactions and corporate default risks

In the process of China's economic transformation and financial reform, the combination of industry and finance has become increasingly prominent and an important force in promoting economic development. However, the accompanying risks cannot be ignored. This paper analyzes the impact mechanism of the combination of industry and finance of entity enterprises on enterprise default risk and the mechanism role of related transactions. It constructs panel data of Chinese listed entity companies for empirical testing. The research findings are as follows: (1) The combination of industry and finance increases the default risk of enterprises. With the influx of industrial capital into the financial field, although it promotes the diversification of enterprise operations, it also brings potential risks such as regulatory arbitrage and related transactions, leading to frequent enterprise defaults. (2) The mechanism test shows that the combination of industry and finance leads to an increase in related transactions between the entity parent company and the financial subsidiary, which in turn increases the default risk of the entity parent company. (3) Further research finds that different types of related transactions have different impacts on default risk. Compared with commodity transactions, capital-related transactions have a significant positive correlation with enterprise defaults.