Soft budget constraint, debt financing and investment

This paper analyses the impact of debt on corporate investment under the framework of duplicate soft budget constraint among the government, banks and firms in China. I find that in the corporate with low growth opportunity and high CFO, it shows significantly negative relationship between debt and investment in non-state-owned company. But in state-owned company it doesn't. There is a significantly negative relationship between short-term debt and investment in non-state-owned corporate. It shows negative relationship between bank loan and investment to non-state-owned corporate. In the corporate with high growth opportunity and low CFO, there is a significantly negative relationship between debt and investment in all corporate, There is a significantly negative relationship between short-term debt and investment in non-state-owned corporate, but in absolute state-controlled corporate the relationship becomes positive. It shows positive relationship between bank loan and investment to non-state-owned corporate.