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The Financial Crisis in 2008, the Stimulus Package, and Distortion of Financial Intermediation in China: A Survival Analysis Approach

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Listed:
  • Moho Shiraishi

    (The University of Kitakyushu)

  • Go Yano

    (Kyoto University)

Abstract

This study aimed to evaluate whether the stimulus package after the 2008 financial crisis led to the distortion of financial intermediation in China. Accordingly, we investigated the relationship between company survival and the financial intermediation function in China during the sample period, which reflects the financial crisis in 2008. The study presents two main findings. First, access to bank loans resulted in a decrease in the risk of failure for the relatively poorly performing state-owned enterprises (SOEs) in China after the 2008 financial crisis. Distorted financial intermediation by banks was more pronounced for the large-sized SOEs. Therefore, “zombie firms” inevitably emerged among the manufacturing SOEs in China as result of the financial crisis and subsequent fiscal expansion. Second, access to short-term bank loans led to a deterioration rather than an improvement in the performance of the poorly performing SOEs after 2007.

Suggested Citation

  • Moho Shiraishi & Go Yano, 2022. "The Financial Crisis in 2008, the Stimulus Package, and Distortion of Financial Intermediation in China: A Survival Analysis Approach," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 64(2), pages 280-323, June.
    • Handle: RePEc:pal:compes:v:64:y:2022:i:2:d:10.1057_s41294-021-00165-0
    DOI: 10.1057/s41294-021-00165-0
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