 Do local banks alleviate ownership discrimination? Evidence from ChinaCeng Zeng, Meng Guo and Xiaoyang Zhao Economic Analysis and Policy, 2025, vol. 87, issue C, 997-1013 Abstract: Information asymmetry is more evident in the non-state-owned enterprises (non-SOEs), than in state-owned enterprises (SOEs), due to the lack of government endorsement. Therefore, it is more difficult for the non-SOEs to obtain credit, creating ownership discrimination in the credit market. Our study investigates the role of local banks in alleviating ownership discrimination. We find that non-SOEs receive more credit compared to SOEs after the establishment of city commercial banks (CCBs) in China, indicating that CCB establishment alleviates the discrimination. Further, CCBs demonstrate information advantage in obtaining and utilizing soft information. Additionally, enterprises that receive more loans after CCB establishment are associated with better operational performance and lower financing costs, rejecting the alternative explanation that these banks allocate more credits to the non-SOEs by charging higher interest rates. Our study provides evidence of the crucial function played by local banks in the banking system. Keywords: Local banks; City commercial banks; Ownership discrimination; Firm financing; Information asymmetry (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:87:y:2025:i:c:p:997-1013 DOI: 10.1016/j.eap.2025.06.041 Access Statistics for this article Economic Analysis and Policy is currently edited by Clevo Wilson More articles in Economic Analysis and Policy from Elsevier |
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