Financial constraints in China: firm-level evidence

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Financial constraints in China: firm-level evidence

Author Info

Sandra Poncet
Walter Steingress
Hylke Vandenbussche

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Abstract

This paper uses a unique micro-level data-set on Chinese firms to test for the existence of a "political-pecking order" 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 faced by private Chinese firms. Thirdly, geographical and sectoral presence of state firms aggravates financial constraints for private Chinese firms (“crowding out?. 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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Paper provided by LICOS - Centre for Institutions and Economic Performance, K.U.Leuven in its series LICOS Discussion Papers with number 22608.

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Date of creation: 2008
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Handle: RePEc:lic:licosd:22608

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Paper
- Poncet, Sandra & Steingress, Walter & VANDENBUSSCHE, Hylke, 2008. "Financial constraints in China: firm-level evidence," CORE Discussion Papers 2008079, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
- Poncet, Sandra & Steingress, Walter & Vandenbussche, Hylke, 2009. "Financial Constraints in China: Firm-Level Evidence," CEPR Discussion Papers 7132, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Sandra, PONCET & Walter, STEINGRESS & Hylke, VANDENBUSSCHE, 2008. "Financial constraints in China : firm-level evidence," Discussion Papers (ECON - DÃ©partement des Sciences Economiques) 2008048, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]

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

This paper has been announced in the following NEP Reports:

NEP-ALL-2009-01-03 (All new papers)
NEP-CFN-2009-01-03 (Corporate Finance)
NEP-CNA-2009-01-03 (China)
NEP-TRA-2009-01-03 (Transition Economics)

References listed on IDEAS
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