Does China's aid boost firm performance in recipient countries?

Gongyan Yang, Yingqun Yang, Tingfeng Tang and Liyan Dai

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

Abstract: The effectiveness of China's aid has been highly debated. Our study uses firm-level data from the WBES and Global Chinese Official Finance Dataset to explore the impact of China's aid on firm performance using an instrumental variable analysis. The results show that China's aid has a positive impact on enterprise performance. We complemented our empirical tests by investigating the potential channels. China's aid may promote firm performance through the alleviation of infrastructure constraints. And it also relaxes financing constraints for firms. This study contributes to the literature by confirming the effectiveness of China's aid and highlights its implications for policymaking.

Keywords: China's aid; Firm performance; Infrastructure; Financing constraints; Instrumental variable analysis (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:55:y:2023:i:pb:s1544612323003306

DOI: 10.1016/j.frl.2023.103958

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