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The Financial Crisis in 2008, the Stimulus Package, and Distortion of Financial Intermediation in China: A Survival Analysis Approach

Moho Shiraishi () and Go Yano ()
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Moho Shiraishi: The University of Kitakyushu
Go Yano: Kyoto University

Comparative Economic Studies, 2022, vol. 64, issue 2, No 5, 280-323

Abstract: Abstract This study aimed to evaluate whether the stimulus package after the 2008 financial crisis led to the distortion of financial intermediation in China. Accordingly, we investigated the relationship between company survival and the financial intermediation function in China during the sample period, which reflects the financial crisis in 2008. The study presents two main findings. First, access to bank loans resulted in a decrease in the risk of failure for the relatively poorly performing state-owned enterprises (SOEs) in China after the 2008 financial crisis. Distorted financial intermediation by banks was more pronounced for the large-sized SOEs. Therefore, “zombie firms” inevitably emerged among the manufacturing SOEs in China as result of the financial crisis and subsequent fiscal expansion. Second, access to short-term bank loans led to a deterioration rather than an improvement in the performance of the poorly performing SOEs after 2007.

Keywords: 2008 financial crisis; Stimulus package; Survival of firms; Distortion of financial intermediation; Bank loans; Hazard model; G31; G32; O16; O53; P34 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1057/s41294-021-00165-0

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