The choice between bank loans, affiliated loans, and non-affiliated loans: evidence from Chinese listed firms

Wei Yin and Xiaoxing Liu

Applied Economics Letters, 2019, vol. 26, issue 15, 1224-1227

Abstract: Using 1944 matched transaction level data over the period 2003 to 2015, we examined the determinants of choice between bank loans, affiliated loans and non-affiliated loans by listed firms in China. Our results show that firms engaged with affiliated loans or non-affiliated loans, which belong to the shadow-banking system, are more likely to pay a higher interest rate and have a shorter loan maturity when compared with a bank loan. In addition, large firms and firms with low liquidity have a higher likelihood of establishing an affiliated loan and non-affiliated loan relationship. Moreover, compared with bank loans, affiliated loans and non-affiliated loans tend to flow to the electricity, gas and water supply industries, which are very limited entry industries that are dominated by state-owned firms.

Date: 2019
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DOI: 10.1080/13504851.2018.1543935

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