Government ownership of banks and corporate maturity mismatch: Evidence from China

Xiaotian Ma, Guanchun Liu, Yuanyuan Liu and Feng He

Journal of Banking & Finance, 2025, vol. 176, issue C

Abstract: In the 1990s and the 2000s, many urban credit cooperatives in China were reformed to city commercial banks with the introduction of government ownership. We exploit this bank ownership reform as a quasi-natural experiment to evaluate its impact on corporate maturity mismatch. We find that local firms reduced reliance on short-term debt for investments by obtaining greater long-term credit. The reduction of corporate maturity mismatch is more pronounced if the city has fewer financial resources, or if the firm has greater financial constraints, R&D intensity, or market competition. Local firms’ capital allocation efficiency also increased. Our findings highlight the positive effect of government ownership in enhancing liquidity and promoting growth.

Keywords: Government ownership of banks; City commercial banks; Corporate maturity mismatch; Difference-in-differences estimate; China (search for similar items in EconPapers)
JEL-codes: D21 G28 G31 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:176:y:2025:i:c:s0378426625000780

DOI: 10.1016/j.jbankfin.2025.107458

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