How Large is the Borrowing Cost Advantage of State-Owned Enterprises?

Jang Ping Thia, Xinyu Kong and Jiaqi Su ()
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Jiaqi Su: Asian Infrastructure Investment Bank (AIIB), Beijing, China

Review of Development Finance Journal, 2023, vol. 13, issue 1, 92-103

Abstract: We provide new evidence of lower borrowing costs for state-owned enterprises (SOEs). Using ORBIS ownership data matched to financing transactions in syndicated loan and bond markets, regressions and propensity score matching estimates confirm the lower financing costs for advanced and developing economies’ SOEs, compared to private sector, and especially for hard currency borrowings. For loans, SOEs’ financing advantage is moderate. For bonds, the advantage is large and up to -120bps. Financing advantage differs slightly but is present for different state ownership stakes. This confirms that SOEs can, with the right conditions, be an effective conduit for state-related capital raising.

Keywords: State–owned enterprise (SOE); syndicated loans; bonds (search for similar items in EconPapers)
JEL-codes: D20 E60 G3 H82 L30 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:afj:journ3:v:13:y:2023:i:1:p:92-103

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