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Financial Mismatch and Default Risk: Evidence from Chinese Nonfinancial Listed Private Enterprises

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  • Xuemei Liu
  • Zi Nie
  • Bingcheng Li

Abstract

Using China’s nonfinancial listed private enterprises as a sample, we discuss the impact of financial mismatch on default risk from the perspective of political connections. The findings suggest that financial mismatch significantly increases the default risk of private enterprises, and political connections can effectively alleviate the default risk caused by financial mismatch. Further mechanism tests show that financial mismatch aggravates private enterprises’ financing constraints and increases their default risk. Our findings provide a reference for alleviating private enterprises’ dilemma of difficult and expensive financing and preventing or resolving the major financial risk of enterprises.

Suggested Citation

  • Xuemei Liu & Zi Nie & Bingcheng Li, 2022. "Financial Mismatch and Default Risk: Evidence from Chinese Nonfinancial Listed Private Enterprises," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(3), pages 852-862, February.
    • Handle: RePEc:mes:emfitr:v:58:y:2022:i:3:p:852-862
    DOI: 10.1080/1540496X.2021.1926235
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    Cited by:

    1. Zhitao, Wang & Xiang, Ma, 2023. "Financial mismatch on corporate debt default risk: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).

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