EconPapers    
Economics at your fingertips  
 

Credit constraints and firm productivity: Microeconomic evidence from China

Yao Li (), Wei Liao and Chen Carol Zhao

Research in International Business and Finance, 2018, vol. 45, issue C, 134-149

Abstract: We use a panel of over 600,000 Chinese firms (1998–2009) to investigate the effects of credit constraints on firm productivity. We find that both internal finance through a firms own cash flow and external credit supply significantly promote firm productivity and productivity growth rates. Specially, there is a substitution effect between internal finance and external credit supply: the marginal effect of internal finance on firm productivity is weaker when firms have sufficient external credit. Also, internal finance is more important for firms in those financially vulnerable industries. Finally, we observe that marginal effect of both external credit supply and internal finance on firm's productivity is weaker for SOEs than non-SOEs.

Keywords: TFP; TFP growth rate; Credit constraint; Internal financing; External finance dependence; Financial market development (search for similar items in EconPapers)
JEL-codes: O1 G2 D24 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0275531917301745
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:riibaf:v:45:y:2018:i:c:p:134-149

DOI: 10.1016/j.ribaf.2017.07.142

Access Statistics for this article

Research in International Business and Finance is currently edited by T. Lagoarde Segot

More articles in Research in International Business and Finance from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-07-06
Handle: RePEc:eee:riibaf:v:45:y:2018:i:c:p:134-149