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

Huidan Lin

Journal of Banking & Finance, 2011, vol. 35, issue 4, 1000-1010

Abstract: 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.

Keywords: Foreign; bank; entry; Long-term; bank; loans; China (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (52)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:35:y:2011:i:4:p:1000-1010

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