Financing of Physical and Intangible Capital Investments in China

Go Yano and Maho Shiraishi

Emerging Markets Finance and Trade, 2020, vol. 56, issue 6, 1351-1376

Abstract: We used firm-level micro panel data for industrial firms in China from 2000 to 2009, which were drawn from a novel database, to study their methods of financing physical and intangible capital investments. Regarding non-listed domestic firms, our findings were as follows: (1) trade credit finances physical capital investments. (2) The complementary relationship between internal and external sources of finance changes from that between cash flows and trade credit to that between cash flows and bank loans as investment risk increases. (3) However, firms forgo debt finance, including bank loans, and rely instead on internal cash flows for financing investments under exceedingly risky conditions, such as the financing of intangible capital investments by financially-constrained high-tech firms.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/1540496X.2018.1562889 (text/html)
Access to full text is restricted to subscribers.

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:mes:emfitr:v:56:y:2020:i:6:p:1351-1376

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

DOI: 10.1080/1540496X.2018.1562889

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().