Economics at your fingertips  

The impact of government property right law on collateral loans: A quasi-natural experiment based on the enactment of Chinese property law

Jing Zeng, Xiongyuan Wang and Min Xiao

International Review of Economics & Finance, 2019, vol. 63, issue C, 273-283

Abstract: We examine how the enactment of the China Property Law (the Law) affects bank loans, especially those using liquid assets as collateral. Using loan-level data and a difference-in-differences method, we find a significant increase in bank loans with liquid assets as collateral after the Law. In addition, we find that the effect of the Law on collateral loans is more pronounced for state-owned firms, firms with better corporate governance, firms with higher information transparency, or during periods of loose monetary policy; these findings indicate that banks are more likely to provide loans with liquid assets as collateral to high-quality firms in the circumstances of abundant credit. We also find that the enactment of the Law increased working capital, inventory turnover, and business risks for firms, suggesting that these loans accelerated capital turnover and reduced inventory storage while exposing firms to higher risks.

Keywords: Property law; Collateral loans; Liquid collateral (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
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:

DOI: 10.1016/j.iref.2019.01.007

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Haili He ().

Page updated 2020-05-02
Handle: RePEc:eee:reveco:v:63:y:2019:i:c:p:273-283