Corporate foreign bond issuance and interfirm loans in China

Yi Huang, Ugo Panizza and Richard Portes

Journal of International Economics, 2024, vol. 152, issue C

Abstract: We use firm-level data to analyze international bond issuance by Chinese non-financial corporations, distinguishing those by sectors classed as ‘risky’. Dollar issuance is positively correlated with the differential between domestic and foreign interest rates, and this effect is particularly strong for firms in risky sectors. Strikingly, firms in risky sectors use the proceeds to do more interfirm lending than firms in non-risky sectors. Moreover, this lending rose significantly after the authorities sought to restrict the financial activities of risky sectors in 2008–09. Firms in risky sectors compound risk by engaging in speculative activities that mimic the behavior of financial institutions while escaping prudential regulation.

Keywords: China; Bond issuance in emerging market countries; Carry trade; Shadow banking (search for similar items in EconPapers)
JEL-codes: F32 F34 G15 G30 (search for similar items in EconPapers)
Date: 2024
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Related works:
Working Paper: Corporate foreign bond issuance and interfirm loans in China (2018)
Working Paper: Corporate foreign bond issuance and interfirm loans in China (2018)
Working Paper: Corporate Foreign Bond Issuance and Interfirm Loans in China (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:152:y:2024:i:c:s0022199624001028

DOI: 10.1016/j.jinteco.2024.103975

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