Does the Chinese banking system promote the growth of firms?

Panicos O. Demetriades, Jun Du, Sourafel Girma, Chenggang Xu

Research output: Working paper

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
Place of PublicationLeicester (UK)
Number of pages28
Publication statusPublished - 4 Feb 2008

Publication series

NamePapers in economics
PublisherUniversity of Leicester
No.08/6
ISSN (Print)1749-8279

Fingerprint

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

Keywords

  • Chinese banking system development
  • panel dataset
  • value added and TFP growth

Cite this

Demetriades, P. O., Du, J., Girma, S., & Xu, C. (2008). Does the Chinese banking system promote the growth of firms? (Papers in economics; No. 08/6). Leicester (UK).
Demetriades, Panicos O. ; Du, Jun ; Girma, Sourafel ; Xu, Chenggang. / Does the Chinese banking system promote the growth of firms?. Leicester (UK), 2008. (Papers in economics; 08/6).
@techreport{dac53bcd18804d3e8c8ccca5fdf5c8c9,
title = "Does the Chinese banking system promote the growth of firms?",
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.",
keywords = "Chinese banking system development, panel dataset, value added and TFP growth",
author = "Demetriades, {Panicos O.} and Jun Du and Sourafel Girma and Chenggang Xu",
year = "2008",
month = "2",
day = "4",
language = "English",
series = "Papers in economics",
publisher = "University of Leicester",
number = "08/6",
type = "WorkingPaper",
institution = "University of Leicester",

}

Demetriades, PO, Du, J, Girma, S & Xu, C 2008 'Does the Chinese banking system promote the growth of firms?' Papers in economics, no. 08/6, Leicester (UK).

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

Leicester (UK), 2008. (Papers in economics; No. 08/6).

Research output: Working paper

TY - UNPB

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

AU - Demetriades, Panicos O.

AU - Du, Jun

AU - Girma, Sourafel

AU - Xu, Chenggang

PY - 2008/2/4

Y1 - 2008/2/4

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.

KW - Chinese banking system development

KW - panel dataset

KW - value added and TFP growth

M3 - Working paper

T3 - Papers in economics

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

CY - Leicester (UK)

ER -

Demetriades PO, Du J, Girma S, Xu C. Does the Chinese banking system promote the growth of firms? Leicester (UK). 2008 Feb 4. (Papers in economics; 08/6).