Loan accessibility for foreign-invested enterprises in China

Yamin Zeng and Junsheng Zhang

China Journal of Accounting Studies, 2015, vol. 3, issue 2, 158-179

Abstract: The paper examines loan accessibility for foreign-invested enterprises (FIEs) in the Chinese credit market. We find that FIEs receive more favourable terms when borrowing from banks, even compared with state-owned enterprises (SOEs). First, FIEs have more lines of credit, and their unused loan ratios are higher. Second, FIEs are not different from SOEs in aspects of collateral requirement, collateral ratio and the need for bribery. Third, FIEs have obtained bank loans more easily since the third bank reform launched in 2003. The results imply that developing economies should pay more attention to the fund crowding-out effect of FIEs, which may exacerbate the financial constraints on domestic firms.

Date: 2015
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DOI: 10.1080/21697213.2015.1005563

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