Open AccessPosted Content
Formal versus Informal Finance: Evidence from China
TLDR
In this paper, the authors take a closer look at firm financing patterns and growth using a database of 2,400 Chinese firms and find that a relatively small percentage of firms in the sample utilize formal bank finance with a much greater reliance on informal sources.Abstract:
China is often mentioned as a counter-example to the findings in the finance and growth literature since, despite the weaknesses in its banking system, it is one of the fastest growing economies in the world. The fast growth of Chinese private sector firms is taken as evidence that it is alternative financing and governance mechanisms that support China's growth. This paper takes a closer look at firm financing patterns and growth using a database of 2,400 Chinese firms. The authors find that a relatively small percentage of firms in the sample utilize formal bank finance with a much greater reliance on informal sources. However, the results suggest that despite its weaknesses, financing from the formal financial system is associated with faster firm growth, whereas fund raising from alternative channels is not. Using a selection model, the authors find no evidence that these results arise because of the selection of firms that have access to the formal financial system. Although firms report bank corruption, there is no evidence that it significantly affects the allocation of credit or the performance of firms that receive the credit. The findings suggest that the role of reputation and relationship based financing and governance mechanisms in financing the fastest growing firms in China is likely to be overestimated.read more
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Dissertation
An analysis of the benefits for New Zealand banks of adopting a relationship banking model for small business clients.
TL;DR: In this paper, the authors conducted interviews with relationship managers from the five major bank brands and across the five metropolitan cities in New Zealand to investigate the sources of value creation and addition accruing to banks through the use of relationship banking with small business clients.
Journal ArticleDOI
Is a Corruption Crackdown Really Good for the Economy? Firm-Level Evidence from China
Zhiyuan Chen,Xin Jin,Xu Xu +2 more
TL;DR: Li et al. as discussed by the authors studied the impact of anticorruption efforts on firm performance, exploiting an unanticipated corruption crackdown in China's Heilongjiang province in 2004, and compared firms in the affected regions with those in other inland regions before and after the crackdown.
Journal ArticleDOI
Board network, investment efficiency, and the mediating role of CSR: Evidence from China
TL;DR: In this paper, the impact of a firm's position in the board network on its investment efficiency and the mediating role of corporate social responsibility (CSR) on that impact was examined.
Posted Content
Bank-SMEs Relationship: A Critical Review of Firm & Industry Specific Determinants Influencing Banks’ Performance
TL;DR: In this article, a review of the existing literature corresponding to banks performance in SMEs sector and investigates the Bank-SMEs relationship is presented, where the issues are highlighted with theoretical background of banks’ performance from SMEs financing perspective.
References
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Sample Selection Bias as a Specification Error
TL;DR: In this article, the bias that results from using non-randomly selected samples to estimate behavioral relationships as an ordinary specification error or "omitted variables" bias is discussed, and the asymptotic distribution of the estimator is derived.
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The central role of the propensity score in observational studies for causal effects
TL;DR: The authors discusses the central role of propensity scores and balancing scores in the analysis of observational studies and shows that adjustment for the scalar propensity score is sufficient to remove bias due to all observed covariates.
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Finance and Growth: Schumpeter Might Be Right
TL;DR: In this paper, the authors examined a cross-section of about 80 countries for the period 1960-89 and found that various measures of financial development are strongly associated with both current and later rates of economic growth.
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Financial Intermediation and Delegated Monitoring
TL;DR: In this paper, the authors developed a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders, and presented a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary.
ReportDOI
Financial Dependence and Growth
Raghuram G. Rajan,Raghuram G. Rajan,Raghuram G. Rajan,Luigi Zingales,Luigi Zingales,Luigi Zingales +5 more
TL;DR: This paper examined whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship; that financial development reduces the costs of external finance to firms, and found that industrial sectors that are relatively more in need of foreign finance develop disproportionately faster in countries with more developed financial markets.