Does the Chinese banking system promote the growth of firms?

Panicos Demetriades, Jun Du, Sourafel Girma, Chenggang Xu

Research output: Contribution to conferencePaper

Abstract

Using a large panel dataset of Chinese manufacturing enterprises during 1999-2005, which accounts for over 90% of China's industrial output, and robust econometric procedures we show that the Chinese banking system has helped to support the growth of both firm value added and TFP. We find that access to bank loans is positively correlated with future value added and TFP growth. We also find that firms with access to bank loans tend to grow faster in regions with greater banking sector development. While the effects of bank loans on firm growth are more pronounced in the case of purely private-owned and foreign firms, they are positive and statistically significant even in the case of state-owned and collectively-owned firms. We show that excluding loss-making firms from the sample does not change the qualitative nature of our results.
Original languageEnglish
Publication statusPublished - 2008
Event21st Australasian finance and banking conference - Sydney, Australia
Duration: 16 Dec 200818 Dec 2008

Conference

Conference21st Australasian finance and banking conference
CountryAustralia
CitySydney
Period16/12/0818/12/08

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Banking system
Bank loans
Value added
TFP growth
Firm growth
Econometrics
Foreign firms
China
Manufacturing
Banking sector
Firm value

Cite this

Demetriades, P., Du, J., Girma, S., & Xu, C. (2008). Does the Chinese banking system promote the growth of firms?. Paper presented at 21st Australasian finance and banking conference, Sydney, Australia.
Demetriades, Panicos ; Du, Jun ; Girma, Sourafel ; Xu, Chenggang. / Does the Chinese banking system promote the growth of firms?. Paper presented at 21st Australasian finance and banking conference, Sydney, Australia.
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Demetriades, P, Du, J, Girma, S & Xu, C 2008, 'Does the Chinese banking system promote the growth of firms?', Paper presented at 21st Australasian finance and banking conference, Sydney, Australia, 16/12/08 - 18/12/08.

Does the Chinese banking system promote the growth of firms? / Demetriades, Panicos; Du, Jun; Girma, Sourafel; Xu, Chenggang.

2008. Paper presented at 21st Australasian finance and banking conference, Sydney, Australia.

Research output: Contribution to conferencePaper

TY - CONF

T1 - Does the Chinese banking system promote the growth of firms?

AU - Demetriades, Panicos

AU - Du, Jun

AU - Girma, Sourafel

AU - Xu, Chenggang

PY - 2008

Y1 - 2008

N2 - Using a large panel dataset of Chinese manufacturing enterprises during 1999-2005, which accounts for over 90% of China's industrial output, and robust econometric procedures we show that the Chinese banking system has helped to support the growth of both firm value added and TFP. We find that access to bank loans is positively correlated with future value added and TFP growth. We also find that firms with access to bank loans tend to grow faster in regions with greater banking sector development. While the effects of bank loans on firm growth are more pronounced in the case of purely private-owned and foreign firms, they are positive and statistically significant even in the case of state-owned and collectively-owned firms. We show that excluding loss-making firms from the sample does not change the qualitative nature of our results.

AB - Using a large panel dataset of Chinese manufacturing enterprises during 1999-2005, which accounts for over 90% of China's industrial output, and robust econometric procedures we show that the Chinese banking system has helped to support the growth of both firm value added and TFP. We find that access to bank loans is positively correlated with future value added and TFP growth. We also find that firms with access to bank loans tend to grow faster in regions with greater banking sector development. While the effects of bank loans on firm growth are more pronounced in the case of purely private-owned and foreign firms, they are positive and statistically significant even in the case of state-owned and collectively-owned firms. We show that excluding loss-making firms from the sample does not change the qualitative nature of our results.

M3 - Paper

ER -

Demetriades P, Du J, Girma S, Xu C. Does the Chinese banking system promote the growth of firms?. 2008. Paper presented at 21st Australasian finance and banking conference, Sydney, Australia.