Purpose The issue of mismatch between investment and financing in China’s capital market, where short-term debt is used for long-term investments, is a significant problem that has recently gained attention. This study aims to investigate the impact of the short-term debt for long-term use (SDLA) mismatch on micro-enterprise financing patterns and provide decision support for preventing systemic financial risks. Design/methodology/approach Using a sample of A-share listed companies from 2006 to 2020, we empirically demonstrate that SDLA significantly increases the likelihood of enterprises falling into Ponzi financing. Findings The results indicate that using short-term debt for long-term investments increases the likelihood of firms falling into Ponzi financing, exacerbating the pressure of debt repayment and reducing the solvency of enterprises. Research limitations/implications This study extends Minsky’s financial instability hypothesis to the micro-enterprise level in China. It identifies how SDLA leads to Ponzi financing through increased debt pressure and reduced solvency. These findings offer empirical evidence for regulators to detect early warning signs of maturity mismatch and for firms to proactively manage debt structures, thereby enriching the understanding of micro-level drivers of macro-financial fragility. Practical implications The practical implications of this study suggest that the financial industry should prioritize serving the real sector, preventing operational risks at the microscopic level to prevent systemic financial risks. By doing so, financial capital can flow into enterprises, solving the problem of the mismatch of financial capital flowing into the real economy and the problem of “de-realization to deficiency” in China’s capital market. Originality/value This study provides valuable insights into effectively preventing and resolving systemic financial risks in China’s capital market.
Bai et al. (Fri,) studied this question.