Major risk shocks, financial relief policies and loan maturity for MSMEs: Evidence from China

Bingbing Shui

Finance Research Letters, 2023, vol. 55, issue PA

Abstract: This paper shows the effect of banking sector financial relief policies on the loan maturity of MSMEs under a major risk shock. Using 259 loan samples from China both before and after the outbreak of COVID-19, I find that financial relief policies reduced the loan maturity of MSMEs by an average of 4%. Two mechanisms are involved:the proportion of bank liquidity loans increased; banks shortened the loan maturity to respond to the increase in risk-taking of their own. This study provides an example of how macroeconomic policies influence micro-behavior in bank lending decisions.

Keywords: Maturity matching; Financial policy; Risk shocks (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:55:y:2023:i:pa:s1544612323002751

DOI: 10.1016/j.frl.2023.103903

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