Specialization in Bank lending and firm deleveraging: Evidence from China

Zijia Ding, Qian Liu and Dexin Che

International Review of Financial Analysis, 2025, vol. 103, issue C

Abstract: Amid China's ongoing economic transformation, addressing enterprise deleveraging and promoting high-quality development have become pressing priorities. This study, using data from Shanghai and Shenzhen A-shares from 2007 to 2022, establishes a theoretical foundation for understanding the impact of specialization in bank lending on corporate deleveraging. The findings indicate that specialization in bank lending primarily facilitates corporate deleveraging by alleviating financing constraints, strengthening internal and external supervision, and improving efficiency. These conclusions remain robust across a series of validation tests. Moreover, the effect is more pronounced among firms with strong-financial flexibility, high corporate resilience, a high degree of market development, and low currency uncertainty. Additionally, this impact is further amplified under supportive policy environments.

Keywords: Specialization in bank lending; Leverage ratio; Joint credit system; Constraints on financing; Strengthening supervision (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:103:y:2025:i:c:s1057521925002753

DOI: 10.1016/j.irfa.2025.104188

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