Real estate prices and firm borrowings: Micro evidence from China

Pu Chen, Chunyang Wang and Yangyan Liu

China Economic Review, 2015, vol. 36, issue C, 296-308

Abstract: Real estate price appreciation can lessen firm's financial constraint by increasing its collateral value. This paper studies this channel by utilizing a large firm-level dataset during the 2000–2007 period on Chinese firms. In contrast to Wu, Gyourko, and Deng (2015) that collateral channel effect in China does not exist either for firms overall or for private firms, we provide empirical evidence on the presence of collateral channel effect and show the effect is significant for private firms but not significant for state owned enterprises, whose behavior is more of political based. Further analysis shows that firms significantly change their debt structures in response to real estate price shocks.

Keywords: Real estate prices; Borrowings; Collateral effect (search for similar items in EconPapers)
JEL-codes: D22 G00 R30 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:36:y:2015:i:c:p:296-308

DOI: 10.1016/j.chieco.2015.10.002

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