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Foreign bank entry and firms' access to bank credit: Evidence from China

  • Lin, Huidan
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    This paper studies the impact of foreign bank entry on domestic firms' access to bank credit using a within-country staggered geographic variation in the policy of foreign bank lending in China. The paper finds that after foreign bank entry profitable firms use more long-term bank loans; whereas firms with higher value of potential collateral do not. It also finds that non-state-owned firms become able to substitute some trade credit with long-term bank loans. The findings suggest that less opaque firms and non-state-owned firms benefit more from foreign bank entry and that collateral may only play a limited role in mitigating the problem of information asymmetry when creditors' rights are not well protected in a host country.

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    File URL: http://www.sciencedirect.com/science/article/B6VCY-511K3T6-2/2/4daa3ba3321ac90036d138996062f00d
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    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 35 (2011)
    Issue (Month): 4 (April)
    Pages: 1000-1010

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    Handle: RePEc:eee:jbfina:v:35:y:2011:i:4:p:1000-1010
    Contact details of provider: Web page: http://www.elsevier.com/locate/jbf

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