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September 10, 2025

The Impact of Short-term Loans on Long-term In-vestments on Corporate Financial Risk: An Empiri-cal Evidence Based on Listed Real Estate Companies in A-share Market

Key Points

Short-term borrowing for long-term investment increases financial risks for real estate companies.
The study found that excessive debt and rising debt costs negatively affect profitability.
Using a two-way fixed effects model, data from 2005 to 2022 highlighted these financial dynamics.
Understanding these risks is crucial for informed investment-financing decisions in the real estate sector.

Abstract

Taking Chinese real estate enterprises listed on the A-share market from 2005 to 2022 as samples, this paper empirically examines the impact of "short-term bor-rowing for long-term investment" on the financial risks of real estate en-terprises by using the two-way fixed effects model and the mediating effect model. The re-sults show that "short-term borrowing for long-term investment" intensifies the financial risks of real estate enterprises, and it mainly exerts negative impacts on the finance of real estate enterprises by increasing exces-sive debt, aggravating debt costs, and reducing profitability. This study is helpful to clarify the causes of risk agglomeration in China's real estate enterprises and provides references for the risk control and investment-financing decisions of real estate enterprises.

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