Analysis of failure of risk management in Evergrande group debt crisis

Zhejiang University of Finance and Economics, School of Finance, Hangzhou 310018, China

^* Corresponding author: liangsai16@gamil.com

Abstract

This study focuses on the failure of risk management in the Evergrande Group’s debt crisis. By analyzing its debt expansion path, financial indicators, and macro-policy background, it reveals the root causes of the crisis. The research finds that Evergrande’s long-term reliance on high-leverage financing and aggressive expansion led to an imbalance in its asset-liability structure and liquidity risks. This was compounded by delayed information disclosure and inadequate policy responses, ultimately leading to a debt crisis. Through time series analysis of financial data from 2022 to 2024, it is confirmed that Evergrande’s debt-to-asset ratio has been continuously rising, its short-term debt repayment capability has deteriorated, and the cash flow gap has widened. Debt restructuring has not effectively improved the financial situation. The study proposes strategies such as debt restructuring, enhancing financial transparency, and establishing a risk warning system, providing a reference for real estate companies to manage risks and prevent systemic risks.