Determinants of Corporate Investment in China: Evidence From Cross-Country Firm Level Data

Nan Geng and Papa N'Diaye

No 2012/080, IMF Working Papers from International Monetary Fund

Abstract: This paper analyzes the evolution of investment in China, its main features, and its key determinants. In recent years, manufacturing, real estate, and infrastructure have been the main drivers of investment. Investment remains largely concentrated in coastal areas, but there has been a shift to greater investments inland in recent years. The empirical analysis of the determinants of investment indicates that financial variables, such as interest rates, the exchange rate, and the depth of the domestic capital market are important determinants of corporate investment. The results suggest in particular that financial sector reform, including that which deregulates and raises real interest rates as well as appreciates the real effective exchange rate, would lower investment and help rebalance growth away from exports and investment toward private consumption.

Keywords: WP; firm; investment; GDP; China; shareholding company; cost of capital; financial sector reform; data regression; stateowned enterprise; listed firm; firms from Hong Kong SAR; stimulus package; Real interest rates; Corporate investment; Real effective exchange rates; Capital markets; Exchange rates; Global (search for similar items in EconPapers)
Pages: 19
Date: 2012-03-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=25787 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2012/080

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().