Official Visit, Bank Credit and Maturity Mismatch: Evidence from Chinese Listed Firms

Bai Yunxia and Muqing Qiu

Emerging Markets Finance and Trade, 2021, vol. 57, issue 15, 4361-4379

Abstract: It is becoming increasingly common in recent years that Chinese government officials visit companies on site and the news about this spread widely on the Internet. Official visits can bring various benefits to companies in China, where the government still plays an important role in allocating economic resources, including bank credit. Based on the data of officials’ visits to Chinese listed firms during 2006–2019, this paper finds that firms’ access to short-term bank loans increases significantly after officials’ visits, which, in turn, significantly enhance the degree of maturity mismatch. Furthermore, the paper finds that the stock market reacts negatively to the maturity mismatch. However, firms’ stock return is discounted less for maturity mismatch both in short and long term when firms are visited by officials. The findings in this paper are helpful in profoundly understanding China’s economic system and Chinese government–enterprise relationship.

Date: 2021
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DOI: 10.1080/1540496X.2020.1810013

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