The impact of China’s fiscal and monetary policy responses to the great recession: An analysis of firm-level Chinese data

Wenjun Xue, Hakan Yilmazkuday and Jason E. Taylor

Journal of International Money and Finance, 2020, vol. 101, issue C

Abstract: This paper investigates the effects of Chinese financial and fiscal policies designed to counter the worldwide Great Recession of 2008. We examine how policies designed to increase bank credit and health (i.e., asset liquidity, capital adequacy ratio, profitability, and bad loan ratio) influenced firm-level output, employment and investment. We also explore the impact of China’s expansionary fiscal policy with regard to these firm-level variables. We find that the policy effects varied based on firm-level characteristics such as size, liability ratio, profitability, ownership and the industry in which the firm operates. With respect to the dynamic effects, our results suggest that Chinese financial and fiscal policies were generally effective in the short run, but their positive impacts ceased within two years.

Keywords: Banking system; 2008 economic stimulus plan; The great recession; Chinese recovery; Panel VAR model; Firm-level investigation (search for similar items in EconPapers)
JEL-codes: E32 E62 G21 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (7)

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Working Paper: The Impact of China's Fiscal and Monetary Policy Responses to the Great Recession: An Analysis of Firm-Level Chinese Data (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:101:y:2020:i:c:s0261560619304085

DOI: 10.1016/j.jimonfin.2019.102113

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