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Financial constraints and the productivity–survival link: evidence from China’s firm-level data

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  • Xiaolu Liu
  • Honglin Li

Abstract

We study how financial constraints influence the productivity–survival link, using data of Chinese industrial firms from 1998 through 2009. The analysis shows that financial constraints do not only play a negative role in firm survival, but also weaken the market selection against inefficient firms on average. We also find that the selection mechanism is ineffective for state-owned firms and large firms, and that financial constraints hinder the growth of firm productivity and market share.

Suggested Citation

  • Xiaolu Liu & Honglin Li, 2017. "Financial constraints and the productivity–survival link: evidence from China’s firm-level data," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(5), pages 763-779.
    • Handle: RePEc:oup:indcch:v:26:y:2017:i:5:p:763-779.
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    File URL: http://hdl.handle.net/10.1093/icc/dtv020
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    Cited by:

    1. Zhang, Dongyang, 2020. "How do firms overcome financial constraint anxiety to survive in the market? Evidence from large manufacturing data," International Review of Financial Analysis, Elsevier, vol. 70(C).
    2. Jie Sun & Lewis Makosa & Jinkun Yang & Fangyuan Yin & Lovemore Sitsha, 2023. "Does corporate tax planning mitigate financial constraints? Evidence from China," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 510-527, January.
    3. Edoardo Ferrucci & Roberto Guida & Valentina Meliciani, 2021. "Financial constraints and the growth and survival of innovative start‐ups: An analysis of Italian firms," European Financial Management, European Financial Management Association, vol. 27(2), pages 364-386, March.
    4. Zhao, Nan & Liu, Xiaojie & Zhang, Zizhe, 2022. "Does competition from the informal sector affect firms’ energy intensity? Evidence from China," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 130-142.
    5. Zumian Xiao & Hongfeng Peng & Zheyao Pan, 2022. "Innovation, external technological environment and the total factor productivity of enterprises," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(1), pages 3-29, March.

    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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