Internal financial constraints and firm productivity in China: Do liquidity and export behavior make a difference?

Minjia Chen and Alessandra Guariglia

Journal of Comparative Economics, 2013, vol. 41, issue 4, 1123-1140

Abstract: Financial factors have been found highly important in influencing firms’ real activities and in promoting aggregate growth. Yet, the linkage between finance and firm-level productivity has been overlooked in the literature. We fill this gap using a panel of 130,840 Chinese manufacturing firms over the period 2001–2007 to estimate a TFP model augmented with cash flow. We find that, especially for illiquid foreign and private firms, productivity is strongly constrained by the availability of internal finance. Furthermore, contrary to private firms, foreign non-exporters display higher dependence of productivity on cash flow than exporters.

Keywords: Productivity; Cash flow; Liquidity; Exports (search for similar items in EconPapers)
JEL-codes: D24 G32 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (95)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0147596713000760
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:41:y:2013:i:4:p:1123-1140

DOI: 10.1016/j.jce.2013.05.003

Access Statistics for this article

Journal of Comparative Economics is currently edited by D. Berkowitz and G. Roland

More articles in Journal of Comparative Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().