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Government ownership of banks and corporate maturity mismatch: Evidence from China

Author

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  • Ma, Xiaotian
  • Liu, Guanchun
  • Liu, Yuanyuan
  • He, Feng

Abstract

In the 1990s and the 2000s, many urban credit cooperatives in China were reformed to city commercial banks with the introduction of government ownership. We exploit this bank ownership reform as a quasi-natural experiment to evaluate its impact on corporate maturity mismatch. We find that local firms reduced reliance on short-term debt for investments by obtaining greater long-term credit. The reduction of corporate maturity mismatch is more pronounced if the city has fewer financial resources, or if the firm has greater financial constraints, R&D intensity, or market competition. Local firms’ capital allocation efficiency also increased. Our findings highlight the positive effect of government ownership in enhancing liquidity and promoting growth.

Suggested Citation

  • Ma, Xiaotian & Liu, Guanchun & Liu, Yuanyuan & He, Feng, 2025. "Government ownership of banks and corporate maturity mismatch: Evidence from China," Journal of Banking & Finance, Elsevier, vol. 176(C).
    • Handle: RePEc:eee:jbfina:v:176:y:2025:i:c:s0378426625000780
    DOI: 10.1016/j.jbankfin.2025.107458
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    Keywords

    Government ownership of banks; City commercial banks; Corporate maturity mismatch; Difference-in-differences estimate; China;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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