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Financial constraints in China : firm-level evidence

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Author Info
Sandra, PONCET
Walter, STEINGRESS
Hylke, VANDENBUSSCHE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)

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Abstract

This paper uses a unique micro-level data-set on Chinese firms to test for the existence of a Òpolitical-pecking orderÓ in the allocation of credit. Our findings are threefold. Firstly, private Chinese firms are credit constrained while State-owned firms and foreign-owned firms in China are not; Secondly, the geographical and sectoral presence of foreign capital alleviates credit constraints face by private Chinese firms (Òcrowding outÓ). Therefore it seems that ongoing restructuring of the state-owned sector and further liberalization of foreign capital inflows in China can help to circumvent financial constraints and can boost the investment of private firms

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Publisher Info
Paper provided by Université catholique de Louvain, Département des Sciences Economiques in its series Discussion Papers (ECON - Département des Sciences Economiques) with number 2008048.

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Length: 28
Date of creation: 03 Dec 2008
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Handle: RePEc:ctl:louvec:2008048

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Related research
Keywords: Investment cashflow sensitivity; China; firm level data; foreign direct investment;

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Find related papers by JEL classification:
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure

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