The belt and road initiative and the over-leverage of securities companies

Using data from 203 securities companies in Chinese provinces that have announced participation in the Belt and Road Initiative (BRI) from 2008 to 2019, we study the impact of the BRI on these securities companies. We find that the BRI has induced a corporate and enterprise bond maturity extension effect, which in turn triggers the over-leverage problem of Chinese securities companies. The impact exhibits a lagged effect, with a stronger impact observed in years 2 and 3 compared to years 0 and 1. Moreover, we identify an asymmetric effect of the BRI on over-levered and under-levered securities companies. State-owned securities companies experience a greater impact compared to non-state-owned ones. Factors such as large asset size, high profitability, and low growth rate could mitigate the impact of the BRI on the securities companies' over-leverage level.