To what extent did the economic stimulus package influence bank lending and corporate investment decisions? Evidence from China
Xiaofei Pan and
Gary Gang Tian
Journal of Banking & Finance, 2018, vol. 86, issue C, 177-193
Using a panel of Chinese firms over the period 2003–2013, we show that, from the supply-side perspective, as a result of the implementation of the economic stimulus package in China, state-owned enterprises (SOEs) received more bank loans and invested more than non-SOEs. We further find that after the implementation of the economic stimulus package, bank lending became less responsive to firm profitability, and firm investments became less responsive to investment opportunities for SOEs, non-SOEs from favoured industries and regions, and non-SOEs with political connections. Overall, our findings support the view that the stimulus package and the associated increase in bank loan supply in China resulted in more resources being allocated to SOEs.
Keywords: Economic stimulus package; Bank loan supply; Bank lending; Investment decisions; SOEs (search for similar items in EconPapers)
JEL-codes: E5 G18 G34 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:86:y:2018:i:c:p:177-193
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