Default and Bankruptcy Resolution in China

Edith Hotchkiss, Kose John, Bo Li (), Jacopo Ponticelli and Wei Wang
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Edith Hotchkiss: Carroll School of Management, Boston College, Boston, Massachusetts, USA
Kose John: Stern School of Business, New York University, New York, USA
Bo Li: PBC School of Finance, Tsinghua University, Beijing, China
Jacopo Ponticelli: Kellogg School of Management, Northwestern University, Evanston, Illinois, USA
Wei Wang: Smith School of Business, Queen's University, Kingston, Ontario, Canada

Annual Review of Financial Economics, 2023, vol. 15, issue 1, 369-385

Abstract: In this article, we review the literature on the recent growth of corporate debt in China and present stylized facts on the evolution of debt composition, nonperforming loans, defaults, and bankruptcy filings. We then describe the legal and political institutions that characterize the system for restructuring and liquidating financially distressed firms, including recent reforms of China's bankruptcy law. Finally, we discuss the main challenges faced by China in the implementation of these reforms, including frictions in judicial enforcement. We also propose potential avenues for future research.

Keywords: bankruptcy law; nonperforming loans; shadow banks; bond markets; default; restructuring (search for similar items in EconPapers)
JEL-codes: G28 G33 K22 O16 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1146/annurev-financial-110921-014557

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