Financial constraints in China: firm-level evidence

PONCET Sandra, Walter Steingress and Hylke Vandenbussche ()

No 2008048, Discussion Papers (ECON - Département des Sciences Economiques) from Université catholique de Louvain, Département des Sciences Economiques

Abstract: This paper uses a unique micro-level data-set on Chinese firms to test for the existence of a Òpolitical-pecking orderÓ 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 face by private Chinese firms (Òcrowding outÓ). 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

Keywords: Investment cashflow sensitivity; China; firm level data; foreign direct investment (search for similar items in EconPapers)
JEL-codes: E22 G32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene
Date: 2008-12-03

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Related works:
Working Paper: Financial constraints in China: firm-level evidence (2008)
Working Paper: Financial Constraints in China: Firm-Level Evidence (2009)
Working Paper: Financial constraints in China: firm-level evidence (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:ctl:louvec:2008048

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