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Biased Lending and Non-performing Loans in China's Banking Sector

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  • Ding Lu
  • Shandre Thangavelu
  • Qing Hu
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Abstract

This article uses a panel data set of public listing companies in China empirically to explore the relationship between banks' lending behaviour and non-performing loans. Our results show that state-owned enterprises (SOEs) got more loans than other firms, other things being equal, and SOEs with high default risks were able to borrow more than the low-risk SOEs and non-SOEs. This suggests that Chinese banks had a systemic lending bias in favour of SOEs, particularly those with high default risks, during the period under investigation. The causes and implications of this behaviour are discussed.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/00220380500155361
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Journal of Development Studies.

Volume (Year): 41 (2005)
Issue (Month): 6 ()
Pages: 1071-1091

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Handle: RePEc:taf:jdevst:v:41:y:2005:i:6:p:1071-1091

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Cited by:
  1. Ying Xu, 2009. "How Does Financial System Efficiency Affect the Growth Impact of FDI in China?," Development Economics Working Papers 22885, East Asian Bureau of Economic Research.
  2. Trien Le & Amon Chizema, 2011. "State ownership and firm performance: Evidence from the Chinese listed firms," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 2(2).
  3. Liu, Chunyan & Uchida, Konari & Yang, Yufeng, 2014. "Controlling shareholder, split-share structure reform and cash dividend payments in China," International Review of Economics & Finance, Elsevier, Elsevier, vol. 29(C), pages 339-357.

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