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An Empirical Test of the "Financial Accelerator" in China: Evidence from the Chinese Industrial Enterprises Database

Jie Chen () and Zhe Li ()
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Jie Chen: School of Economics, Shanghai University of Finance and Economics, Shanghai 200433, China; China (Shanghai) Pilot Free Trade Zone Subbranch, Shanghai Branch, Bank of Communications, Shanghai 200131, China

Frontiers of Economics in China, 2015, vol. 10, issue 3, 509-526

Abstract: The purpose of this paper is to test the applicability of the "financial accelerator¡± mechanism to China. Using the Chinese Industrial Enterprises Database, we find strong evidence suggesting that the employment and investment of leveraged firms are less responsive to aggregate fluctuations. This finding goes against the implications of the "financial accelerator¡±. To make sure our empirical result is reliable, we have done several robustness checks using different estimation methods and subsamples.

Keywords: Financial Accelerator; Leverage; Chinese Industrial Enterprises Database (search for similar items in EconPapers)
JEL-codes: D22 E32 G30 (search for similar items in EconPapers)
Date: 2015
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