Does the withdrawal of implicit government guarantees affect the shadow banking decisions of private non-financial enterprises? Evidence from China

Jun Zhang, Ling Feng and Yang Xiao

Asia-Pacific Journal of Accounting & Economics, 2026, vol. 33, issue 2, 266-285

Abstract: This study uses the theory of real options to investigate how the withdrawal of implicit government guarantee affects the shadow banking decisions of private non-financial firms. This empirical research uses data from 2015 to 2022. The results show that such withdrawals reduce shadow-banking activities among private enterprises; this includes time heterogeneity, which has the release of free cash flow and the reduction of agency cost as its mechanism, and the heterogeneity of corporate governance and market environment. This study enriches existing research on corporate shadow banking and provides policy implications for the regulation thereof.

Date: 2026
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DOI: 10.1080/16081625.2025.2473318

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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