| By: |
Sandra PONCET (Centre dÕEconomie de la Sorbonne, Universite Paris 1 and CEPII,);
Walter STEINGRESS (Boston College);
Hylke VANDENBUSSCHE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)) |
| Abstract: |
This paper uses a unique micro-level data-set 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 (Òcrowding outÓ). 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. |
| Keywords: |
Investment-cashflow sensitivity, China, firm level data, foreign direct investment |
| JEL: |
E22 G32 |
| Date: |
2009–09–14 |
| URL: |
http://d.repec.org/n?u=RePEc:ctl:louvir:2009035&r=cna |