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N° 2009-29 |
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| November 2009 |
| Financial Constraints in China: Firm-Level Evidence |
Sandra Poncet
Walter Steingress
Hylke Vandenbussche |
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| This paper uses a unique micro-level data-set over the period 1998-2005 on Chinese
firms to test for the existence of a "political-pecking order" in the allocation of credit.
Our findings are threefold. Firstly, private Chinese firms are credit constrained while
State-owned firms and foreign-owned firms in China are not; Secondly, the
geographical and sectoral presence of foreign capital alleviates credit constraints
faced by private Chinese firms. Thirdly, geographical and sectoral presence of state
firms aggravates financial constraints for private Chinese firms (“crowding out”).
Therefore it seems that ongoing restructuring of the state-owned sector and further
liberalization of foreign capital inflows in China can help to circumvent financial
constraints and can boost the investment of private firms. |
Non-technical summary  |
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Résumé
non-technique
en français |
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| Full text |
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| Investment-cashflow sensitivity; China; firm level data; foreign
direct investment |
Keywords |
| E22; G32 |
JEL classification |
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