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An Attempt to Profile the Finances of China’s Enterprise Sector

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  • Cem Karacadag
  • Paul J. Heytens

Abstract

This paper examines the leverage, efficiency, and debt-repayment capacity of the Chinese enterprise sector using aggregate and firm level data. The cash coverage of interest expense, in particular, is used as a bridge between enterprise finances and banks' asset quality in order to develop insights on banking soundness. The interest coverage analysis corroborates the high level of nonperforming loans in the financial system. This underscores the urgency of hardening budget constraints on state-owned enterprises and stemming the flow of new bad loans by accelerating ongoing structural reforms.

Suggested Citation

  • Cem Karacadag & Paul J. Heytens, 2001. "An Attempt to Profile the Finances of China’s Enterprise Sector," IMF Working Papers 01/182, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:01/182
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=15467
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    References listed on IDEAS

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    1. Pomerleano, Michael, 1998. "The East Asia crisis and corporate finances : the untold micro story," Policy Research Working Paper Series 1990, The World Bank.
    2. Steinfeld,Edward S., 1998. "Forging Reform in China," Cambridge Books, Cambridge University Press, number 9780521633352, April.
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    Cited by:

    1. Antonio Garcia Pascual & Jorge Cayazzo & Socorro Heysen & Eva Gutierrez, 2006. "Toward An Effective Supervision of Partially Dollarized Banking Systems," IMF Working Papers 06/32, International Monetary Fund.
    2. ECKAUS, Richard S., 2006. "China's exports, subsidies to state-owned enterprises and the WTO," China Economic Review, Elsevier, vol. 17(1), pages 1-13.
    3. Rupert D Worrell, 2004. "Quantitative Assessment of the Financial Sector; An Integrated Approach," IMF Working Papers 04/153, International Monetary Fund.
    4. Reinout De Bock & Alexander Demyanets, 2012. "Bank Asset Quality in Emerging Markets; Determinants and Spillovers," IMF Working Papers 12/71, International Monetary Fund.

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